Episode summary
Can the Asia Equity Rally Continue?
Exchanges (Goldman Sachs)
· · Hosts: Tucker York, Alison Mass, FX de Mallmann, Allison Nathan, George Lee, Tony Pasquariello, Alison Nathan · Guests: Tim Moe
Summary
Tim Moe argued that North Asia’s equity strength rests on two forces: the AI-driven tech trade and relative insulation from the energy shock tied to the Middle East war. He said the Trump-Xi meeting was market-friendly mainly because “no harm was done,” helping keep geopolitical tension from worsening, while North Asia’s richer economies and larger buffer stocks have cushioned the region better than South Asia.
On China, Moe drew a sharp distinction between onshore A shares and offshore H shares. He said A shares have benefited from policy support and improving earnings as producer prices turned positive after more than three years of deflation, while offshore China has lagged because its biggest stocks have delivered weaker earnings. He also said investor sentiment toward China is around the 40th percentile, not the extreme pessimism seen a few years ago.
Moe was most constructive on Korea and Taiwan, where the semiconductor memory cycle and AI exposure have powered big gains. He said the memory supercycle could last three to five years, though short-term conditions are overbought and vulnerable to pullbacks. He also remained overweight Japan, citing political stability, earnings growth, governance improvements, and a broadening set of themes from robotics to re-industrialization.
Key takeaways
- Tim Moe said North Asia is benefiting from both AI exposure and relative insulation from the region’s energy supply shock.
- He sees China as split between stronger onshore A shares and weaker offshore H shares, with earnings and policy support favoring A shares.
- Moe believes the memory-chip upcycle could last three to five years, even though Korean semiconductor stocks look technically overbought after huge gains.
- He is overweight Japan because of political stability, decent earnings growth, governance reform, and AI-linked industrial themes.
- Moe warned that a prolonged closure of the Strait of Hormuz could trigger a summer correction through higher energy prices and supply-chain stress.
Notable quotes
“it appears no harm was done. I know that sounds like a very low bar, but if you want to classify the various presidential meetings”
“we think that this is a unique super cycle, which is going to last a lot longer than your conventional memory cycle”
“if you're in an extended period of supply running short of demand, that means you've got high pricing power”
“we've been very aware that, you know, stock prices don't go up in a straight line”
“the market has really been veering toward the AI trade in Japan as well as it has obviously in Korea and Taiwan”
How the episode opens
From the Trump-Xi meeting in China to the global race for advanced semiconductors, North Asia is increasingly at the center of both geopolitics and markets. So what's driving the region's momentum, and can it continue? Welcome to Exchanges, the weekly show where I find out how we here at Goldman Sachs are making sense of the most consequential events impacting economies and markets.
I'm Allison Nathan. My guest today is Tim Moe, Chief Asia Pacific Regional Equity Strategist and Co-head of Macro Research in Asia in Goldman Sachs Research. We'll be discussing the implications of the Trump-Xi meeting, the semiconductor chip shortage, and the broader forces shaping markets across North Asia.
Tim, welcome to Exchanges. Well, thank you so much for having me. So Tim, let's start with last week's much-anticipated summit between President Trump and China's President Xi Jinping.
What stood out most to you from those discussions? I think the key takeaway is that it appears no harm was done. I know that sounds like a very low bar, but if you want to classify the various presidential meetings, US presidential meetings with Chinese counterparts, there's an accepted scholarly classification structure of six different levels ranging from most positive and consequential, to most negative.
And this was sort of in the middle with not really a lot of major change. But against a background of tension geopolitically, globally and concern over US and China friction, just having calm in the relationship, I think was appreciated and desired by both sides. And I think from a market perspective, where expectations were low going into it, that this is at least a welcome outcome and no harm was done.
So that is an encouraging takeaway, I think. No harm done. I like that, Tim, and the way you put it.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- asia equity rally
- ai trade
- semiconductor memory cycle
- energy supply shock
- north asia outperformance
Companies and tickers mentioned
- Goldman Sachs
Watch the episode
Watch “Can the Asia Equity Rally Continue?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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