UBS Maintains Overweight on China Stocks, Downgrades India and Taiwan Stocks to Underweight on Global Economic Risks
UBS Maintains Overweight China Stocks – Downgrades “India-Taiwan Stocks” to Underweight, Warns Emerging Markets Still Facing Global Economic Pressures, Warns of 3 Risk Factors in 2568
On March 18, 2025 , UBS Securities released the UBS APAC Strategy report, outlining investment strategies for emerging markets (EM) and the Asia Pacific (APAC) region for 2568. The report projects that the MSCI Emerging Markets Index (MSCI EM) will have only a 3% upside and the MSCI Asia ex Japan (AxJ) Index will have an 8% upside by the end of 2568.
However, the market is still facing pressure from the slowdown of the global economy, which has caused the global GDP growth rate to decrease and there is a risk of recession in some countries. UBS also warns of the risk from the US trade protectionist policy (Tariff Risks), especially "Reciprocal Tariffs", which may affect the Asian stock markets, especially China and Thailand.
In addition, UBS expects that emerging markets (EM) may have a chance to recover in the short term (1-3 months) as the US economic outlook starts to lose its comparative advantage. However, in the long term, EM markets will still face pressure from trade tariffs and a slowdown in the global economy.
Investment strategies in ASEAN markets
UBS has upgraded its rating on the Thai stock market to "Overweight," believing the stock market has potential to rebound after facing heavy selling pressure recently. They see negative policy factors easing, new measures like Thai ESG Extra (a 5-year tax-deductible program for investors) may offset selling pressure from LTF funds, while listed companies are showing signs of recovery. Large-cap stocks that previously faced pressure are showing improved trends, and the overall investment sentiment has become more positive.
In addition, the Thai stock market is entering the lowest point of the investment cycle (Valuation Trough), with P/E and P/BV levels falling to the same level as during COVID-19, which is the point that UBS sees as an attractive investment point.
UBS stated that the Malaysian and Philippine stock markets remain promising, as Malaysia has a more stable political and economic environment than other ASEAN countries, and the Philippines boasts high economic growth and strong corporate earnings growth.
Investment strategies in China, India and Taiwan markets
UBS maintains its Overweight rating on the Chinese market, citing supportive government policies, particularly those stimulating domestic consumption, as well as the AI and technology sectors as key drivers of the Chinese stock market's recovery. Meanwhile, foreign capital is beginning to flow back into the Chinese stock market as investors see growth opportunities.
In addition, the weight of investment in the Indian stock market has been reduced to Underweight because the share prices of Indian companies remain high, even though the Indian stock market has adjusted to some extent, and the performance of listed companies has not grown as much as it should, coupled with the inflow of funds into mutual funds starting to decrease. In February 2568, investment in Indian mutual funds fell to a 10-month low.
Regarding Taiwan, UBS has downgraded its rating to Underweight, citing geopolitical risks to the Taiwanese stock market, particularly tensions between Taiwan and China, and the overvaluation of AI and semiconductor stocks, which could face selling pressure if these industries slow down.
Risk factors to monitor in 2568
UBS has identified the following risk factors to monitor in 2568 :
- The risk of US tariffs If the US enforces the policy of "Reciprocal Tariffs", Thailand may be affected due to the high trade balance with the US.
- Slowdown in Chinese economy The Thai stock market is mainly dependent on Chinese tourism. If the Chinese economy recovers slower than expected, it may affect the Thai economy.
- Interest rate changes The US Federal Reserve (Fed) could affect capital flows in emerging markets.
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