Goldman Sachs Bets on AI Boom in Asia, Urges Shift to Korean and Taiwanese Tech Stocks

 

Global investment giant Goldman Sachs is repositioning its Asian equity strategy, urging investors to increase their exposure to South Korean and Taiwanese technology shares, betting on the burgeoning artificial intelligence (AI) sector. 

 

This move comes as a leading Thai brokerage, Kiatnakin Phatra Securities (KKP), paints a cautious picture for the domestic market, advising a focus on international diversification.

 

Speaking at the "Future of Asia" seminar in May, Timothy Moe, Goldman Sachs' Chief Asia Pacific Regional Equity Strategist, highlighted a global economy that, while still growing, is experiencing a slowdown. 

 

He pointed to persistent risks from tax uncertainties and geopolitical tensions, recommending investors seek out "idiosyncratic opportunities" less reliant on broader macroeconomic factors.

 

Moe noted that a 10% rise in oil prices, potentially triggered by Middle East conflicts, could trim global GDP by 0.1% and push inflation up by 0.2%. 

 

In such a volatile environment, he suggested that ASEAN-4 markets, commodity stocks, and defensive equities might outperform the wider Asian market.

 

For the US market, Goldman Sachs has marginally raised its GDP forecasts and lowered the probability of a recession, attributing this to easing tax pressures. 

 

However, concerns remain over fiscal indiscipline, which could weigh on the dollar and bond markets. The bank projects the S&P 500 to yield around 4-5% over the next 12 months, provided a recession is avoided, setting a target of 6,500 points.
 

 

In commodities, gold is recommended given the prevailing high uncertainty, anxieties over US institutional risks, and robust buying from central banks globally. 

 

Within Asian equities, Goldman Sachs advises increasing exposure to South Korea, Taiwan, and hardware technology sectors, while reducing weightings in Singapore and Indonesia. 

 

China and Japan are still recommended as overweight positions. 

 

The investment strategy for the latter half of the year will focus on stocks benefiting from a weaker dollar, those with high shareholder returns, strong earnings quality, and those likely to see upward revisions in earnings estimates, alongside aerospace & defence, AI, and companies benefiting from Chinese government policies.

 

 

 

Thai Market Faces Headwinds

Meanwhile, Dr Pipat Luengnaruemitchai, Chief Economist at KKP Securities, painted a challenging outlook for the Thai economy, citing "headwinds from all sides." 

 

He highlighted a significant slowdown in the crucial tourism sector due to a noticeable drop in Chinese visitor numbers. Ongoing uncertainty from reciprocal trade negotiations and financial deleveraging affecting domestic demand also pose substantial risks.

 

Dr Pipat acknowledged the need for economic stimulus but warned of limitations in fiscal policy due to high public debt. Any additional stimulus might require raising the debt ceiling and should ideally target long-term infrastructure investment. 

 

 

On monetary policy, already low interest rates restrict the central bank's scope for action, potentially necessitating "unconventional policies" to navigate a global ultra-low interest rate environment. 

 

KKP anticipates Thailand's policy interest rate could fall to 1.0%.

 

Persistent domestic political uncertainty continues to dent investor confidence, while the Thai Baht's underlying weakness reflects broader economic fragility. 

 

Dr Pipat stressed the imperative for Thailand to accelerate structural reforms in areas such as labour, education, innovation, regulation, and national competitiveness to bolster long-term growth potential.

 

Taweesak Paopanlop, Head of Economic and Investment Analysis (CIO Office) at KKP Securities, suggested that global stock markets might face short-term selling pressure from import tariffs and protectionist policies. 

 

However, he expects a robust recovery in 2026, driven by stimulus measures in the US and Europe, particularly US tax cuts projected to boost 2026 GDP by 0.5% and earnings per share by over 5%.

 

KKP continues to recommend being fully invested in various assets, aligned with individual risk tolerances. 

 

They view the S&P 500 at 5,800 points as an opportune entry point for gradual investment, with a mid-2026 target of 6,500 points. 

 

The brokerage particularly favours "quality stocks" and "defensive stocks" — those with strong fundamentals, low risk, and consistent dividend payouts — to maintain portfolio stability amidst market volatility.