Standard Chartered: Technology to Drive 80% of Corporate Earnings Growth in Asia

Standard Chartered expects the technology sector to account for nearly 80% of total corporate earnings growth across Asia excluding Japan in 2026, reinforcing its bullish outlook on regional equities as artificial intelligence and semiconductor demand continue to reshape investment trends.

In its latest market outlook, the bank said it maintains an overweight recommendation on Asian equities outside Japan, citing the sustained strength of technology companies while anticipating a broader expansion of earnings growth into non-tech sectors during 2027.

According to the report, earnings for companies included in the MSCI Asia ex-Japan Index are projected to increase by approximately 65% in 2026, representing the fastest earnings growth among the world's major equity markets.

Standard Chartered said the technology sector alone is expected to generate roughly four-fifths of that expansion, supported by a robust semiconductor cycle, resilient capital spending, and accelerating global demand for artificial intelligence infrastructure.

The bank noted that continued investment in AI-related hardware, including advanced processors, memory chips, and supporting components, remains the principal catalyst behind the region's earnings momentum.

The report highlights South Korea and Taiwan as the primary contributors to Asia's projected earnings expansion.

South Korean companies are expected to account for approximately 65% of total earnings growth across the region next year, while Taiwanese firms are projected to contribute another 15%, reflecting both economies' dominant positions in the global semiconductor supply chain.

Demand for memory chips, AI processors, and advanced semiconductor manufacturing technologies continues to support corporate profitability in both markets, according to the bank.

Standard Chartered acknowledged that the pace of upward earnings revisions may gradually moderate as comparisons become more challenging following the sector's recent strong performance.

Nevertheless, the bank believes the medium-term outlook remains constructive, supported by several structural drivers, including sustained AI-related capital expenditure, improving pricing for memory semiconductors, and broader adoption of artificial intelligence technologies across industries.

These trends, the report said, should continue to provide a solid foundation for corporate earnings growth throughout 2026.

Looking ahead, Standard Chartered expects the region's earnings growth to become increasingly diversified during 2027, extending beyond technology into a wider range of economic sectors.

The bank's baseline scenario assumes the continued normalization of shipping through the Strait of Hormuz, a development that would help ease energy costs for Asia's major oil-importing economies and improve the operating environment for manufacturing, industrial, and consumer-focused businesses.