Goldman says don't rotate from Asia's tech winners

GOLDMAN SAYS DON'T ROTATE FROM ASIA'S TECH WINNERS

Lower oil prices and easing Iran tensions have boosted the case for European equities, with investors debating whether leadership could broaden beyond the U.S. technology trade.

Goldman Sachs sees a similar question in Asia: should investors rotate into other markets or sectors after a strong tech-led first half, or stick with the winners?

The bank's answer is straightforward. "Stick with core themes," strategists say, arguing that earnings strength is playing an increasingly important role in driving performance.

Goldman is overweight Korea, Taiwan, Japan and China A-shares, and favours tech hardware, capital goods and banks. It also remains positive on themes including AI infrastructure, power demand, defence spending and U.S. reindustrialisation.

Goldman expects mid-teens second-half returns for the MSCI Asia Pacific ex-Japan (.MISX00000PUS) index and says its 12-month target implies a 23% USD price return.

In Goldman's view, "earnings are paramount", suggesting leadership is more likely to persist than rotate.