Asia Rewired: Geopolitical Transition, the China Shock and the AI Revolution Are Reshaping Asia's Economies
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Key Views
The report identifies 11 themes spanning trade and supply-chain reorganization, geopolitically driven FDI reallocation, China Shock 2.0, a new AI growth model, energy security, rare earths and critical minerals, Asia's defense revival, China's export model, the yen and Japan's resurgence, dedollarization, and the impact of high developed-market interest rates. Vietnam, Malaysia, and India emerge as primary beneficiaries of supply-chain diversification, with distinct opportunities in semiconductors, electronics, pharmaceuticals, and power equipment. Conversely, lower value-added manufacturing economies such as Indonesia, Thailand, and the Philippines face greater vulnerability as Chinese exports move up the technology ladder.
Outlook
Nomura expects continued supply-chain diversification, with benefits accruing only to countries possessing relevant industrial foundations. AI hardware cycles will intensify competitive pressure. Financially, the firm anticipates medium-term dollar weakness, supporting gold and yen appreciation, though high DM rates may periodically pressure Asian currencies.
Recommended Securities
Vietnam and Malaysia supply chains, India electronics and power equipment, China green tech and cross-border e-commerce, Korea and Japan defense and robotics, gold, the yen, and Korea and Thailand rates.