HanYa Investment: Governments of multiple Asian countries have launched a new round of stimulus measures, maintaining a generally optimistic outlook on risk assets in the short term
Hanya Investment released its outlook for the fourth quarter of 2025, expecting economic growth in the United States and East Asia to slow down, with policy stimulus driving recovery in early 2026. The Federal Reserve is expected to cut interest rates by 25 basis points in December, and Asian central banks will also further reduce rates, benefiting risk assets. Although U.S. job growth has stagnated and the government shutdown affects GDP growth, a reversal is expected in the first quarter of next year. Japan's GDP growth will be weak, but exports are expected to rebound. New stimulus measures in China will dominate the economic outlook for 2026, targeting a GDP growth of at least 4.5%
According to the Zhitong Finance APP, HanYa Investment has released its outlook for the fourth quarter of 2025, stating that economic growth in the United States and East Asia is expected to slow in the coming months until policy stimulus measures drive economic recovery in early 2026. The Federal Reserve announced a 25 basis point reduction in the target range for the federal funds rate to between 3.75% and 4.00% at its October meeting, and HanYa Investment expects another 25 basis point cut in December. In Asia, central banks are expected to further lower interest rates in this year and the first half of 2026, with a positive impact on the Asian economy and profits likely to continue into the second half of 2026. Due to favorable economic data, the multi-asset investment portfolio solution team at HanYa remains generally optimistic about risk assets in the short term as of the end of 2025.
In the United States, recent stagnation in job growth, the short-term impact of the federal government shutdown, and steadily rising tariff costs are expected to lead to a slowdown in GDP growth in the fourth quarter of 2025 and the first half of 2026. Nevertheless, the effects of the government shutdown are expected to reverse in the first quarter of next year, and the anticipated lagged positive impact of the Federal Reserve's expected rate cuts of 25 basis points in October and December should offset some of the related shocks. According to performance guidance, corporate spending on data centers and related power infrastructure will continue to grow in the coming quarters, although the growth rate will slow. This should benefit technology-related exports from South Korea, Singapore, and Taiwan.
Due to weakening exports and industrial production, Japan's GDP growth is also expected to stagnate in the third quarter and remain weak in the fourth quarter. However, leading indicators suggest that exports will rebound later this year, and business investment will continue to grow. The new Prime Minister of Japan is expected to strengthen fiscal stimulus measures in 2026.
In China, the new stimulus measures proposed at the December economic work conference will dominate the economic outlook for 2026. The government is expected to set a GDP growth target of at least 4.5% for next year, possibly closer to 5%. The new stimulus measures are likely to focus on consumption subsidies and support for industrial investment, particularly in the technology sector.
India's economic activity indicators seem to be at an initial turning point, expected to strengthen in early 2026. The government has begun implementing several fiscal stimulus measures, including reforms to the goods and services tax and reductions in personal income tax, totaling 1.0% to 1.3% of GDP. The Reserve Bank of India is expected to further ease monetary policy in December.
ASEAN economies are benefiting less from the artificial intelligence infrastructure boom, but Indonesia and the Philippines have accelerated monetary policy easing, and fiscal policy is expected to stimulate a recovery in consumption in Thailand. Related stimulus measures should prevent excessive slowing of economic growth in 2026 while shifting growth momentum from exports to domestic demand, particularly in consumption and the real estate market's inflation.
From 2025 to date, the performance of stocks and fixed income has been outstanding. European, Asia-Pacific (excluding Japan), Japanese, emerging markets, and U.S. stock markets have all recorded double-digit returns. As a result, current stock valuations have risen significantly since the beginning of the year.
In terms of asset allocation, due to favorable economic data, the multi-asset investment portfolio solution team at HanYa remains generally optimistic about risk assets in the short term as of the end of 2025. With a positive outlook for the Indian economy, the investment team has a relative preference for emerging markets and Asian markets Benefiting from improved profit growth, declining inflation, and expectations of potential interest rate cuts, the market outlook is relatively positive. China is another major market that the investment team is focusing on— the Central Committee Political Bureau meeting and the Fourth Plenary Session of the Central Committee scheduled for October are expected to help in assessing future market and regional trends.
Looking ahead to 2025 and beyond, considering concerns about valuations, the multi-asset portfolio solutions team's stance will lean towards neutral, with close attention paid to signs of weakness in the U.S. economy, particularly employment data
