AI Bubble Fears, Policy Splits Loom Over Asia Stocks in 2026

Asian equities kicked off the new year with sharp gains, but the advance may face headwinds from concerns over an artificial intelligence (AI) bubble and diverging interest-rate paths across the region, Winnie Hsu reported for Bloomberg News.

Cheaper valuations for Chinese chipmakers and Beijing’s push for technological self-sufficiency provide some buffer. (Photo: China Daily)

Asia’s deep ties to the global AI supply chain leave it exposed to any sharp reversal on Wall Street, even as cheaper valuations for Chinese chipmakers and Beijing’s push for technological self-sufficiency provide some buffer.

The sector remains firmly in investors’ sights after MSCI’s Asia stock index beat global peers by nearly five percentage points last year, its strongest relative showing since 2017.

Policy divergence will be another key driver, with growth-focused stances in China and India contrasting with efforts to curb inflation in Japan, Australia and New Zealand.

Meanwhile, a rotation may emerge into laggards seen as better shielded from external shocks. South Korea — last year’s standout — may extend gains if market reform momentum holds.