Asia’s economic resilience and long-term growth drivers remain intact despite global macroeconomic uncertainty, according to Manulife Investment Management’s 2025 Mid-Year Asia Investment Outlook released today.
At a virtual media briefing, the firm highlighted innovation, localisation, and digital transformation as key structural themes underpinning investment opportunities across the region.
Luke Browne, global head of multi-asset solutions and senior portfolio manager and head of multi-asset solutions for Asia, implied that the region continues to offer compelling multi-asset investment prospects in the second half of the year. While global markets are increasingly fragmented due to diverging policy paths and fiscal uncertainty, especially in the US, Asia’s structural strengths in emerging technologies, resilient consumption, and regional integration remain intact.
He elaborated further, “The macro environment in 2025 has evolved dramatically in just six months. What began as a synchronised easing story is now fragmenting as government decisions, particularly in the US, trigger ripple effects across global trade and capital markets. In our view, while the Fed’s pivot remains intact, the pace and scale of rate cuts will depend on the durability of US growth, job creation trends and the evolving trade environment.”
While the US Federal Reserve is expected to cut interest rates to 3.5 per cent by mid-2026 amid subdued growth and ongoing trade tensions, Asia’s central banks are adopting a more flexible stance to support domestic economies. Local bonds across the region are seeing renewed momentum, as investors seek diversification and higher returns.
“The US Federal Reserve left Fed Funds unchanged at 4.5 per cent in the first half of 2025,” said Murray Collis, head of Asia ex-Japan fixed income. “The Fed will continue to be data dependent for its future decisions and has not reacted impulsively to trade policies, which remain under negotiation, preferring to monitor their impact on growth and inflation as this comes through. The market is expecting the Fed to resume cutting rates in the second half, and this will be supportive for fixed income overall.”
Collis added that Asia’s local bond markets are well-positioned to capitalise on this shift. “In local Asia fixed income markets, we see room for selective Asian central banks, including Malaysia, Thailand, Indonesia and Philippines to cut rates further as they seek to buffer the impact from higher US tariffs on domestic growth, which will help boost returns in Asian local bonds,” he said. “While Asia USD credit should continue to appeal to investors based on their attractive yields and lower duration compared with peers.”
Looking ahead, Collis remains confident in the region’s fixed income trajectory. “Asia fixed income is poised to build on the positive momentum in the first half of 2025 to deliver attractive full-year returns for investors,” he said. “With uncertainty around the US fiscal position and an underperforming US dollar so far this year, we see greater interest from global and Asia-based investors turning back to the region for investment and diversification opportunities.”
On the equities front, Asia remains an attractive hunting ground for long-term structural growth, particularly in tech, healthcare, and consumer-related sectors. Charlie Dutton, head of emerging market equities, sees high-conviction themes across China, India, and ASEAN, supported by macro stability, favourable policy shifts, and rising regional demand.
He pointed to Mainland China’s pivot toward tech self-sufficiency, India’s favourable demographics and policy momentum, and ASEAN’s rising appeal due to supply chain shifts and macro stability.
Dutton also emphasised Asia’s expanding internal trade dynamics, particularly China’s deeper engagement with ASEAN markets, alongside Taiwan’s continued leadership in advanced semiconductors and network technologies.
“In Mainland China, the focus has shifted toward structural transformation,” Dutton said. “This includes accelerating AI localisation, increasing fiscal spending to four per cent of GDP, and expanding trade ties with ASEAN. While headlines often highlight trade tensions, the real story lies in China’s push for tech self-sufficiency, healthcare innovation, and niche domestic consumption.”
He added that Taiwan’s strengths in advanced technology continue to attract capital, despite global headwinds. “Opportunities span from AI server supply chains, next-gen smartphone upgrades, to 800G network infrastructure. While export risk remains a concern, the market continues to attract global capital, especially in chip design and co-packaged optics,” he said.
India also stands out in the outlook for its internal demand and economic insulation. “Personal tax cuts are boosting consumption, and with limited trade exposure—US goods exports account for just two per cent of GDP—India is relatively insulated from tariff shocks,” explained Dutton.
Turning to South East Asia, he noted growing investor confidence in the region. “Countries like Indonesia, Thailand, and Malaysia are benefiting from lower inflation, rate cuts, and supply chain realignment,” he said. “With young populations, improving infrastructure, and reform momentum, ASEAN is attracting foreign investment and driving domestic demand. We see strong potential in companies aligned with rising consumption, digital inclusion, and regional integration.”
Manulife’s outlook suggests that while volatility remains a concern globally, particularly with US fiscal risks and trade uncertainty, Asia is positioned as a relative safe haven for investors seeking both resilience and long-term returns. This is particularly relevant for ASEAN economies, where young populations, improving infrastructure, and digital acceleration continue to power economic transformation. 