Investment Analysis: Asia Stock Market Overview – Week 35, 2025

Sector Review

Semiconductors and equipment are the clearest structural winners. Taiwan and Japan names tied to AI compute, advanced logic, HBM memory, and test intensity show high margins, strong cash generation, and improving order books. Policy risk and export rules remain overhangs, but leaders with net cash or modest leverage can invest through volatility and defend share.

Internet and platforms in China remain fundamentally attractive at scale but remain hostage to regulatory tone, data/AI guardrails, and capital‑allocation credibility. Selective M&A in content and audio broadens TAM, yet valuation re‑rating requires consistent execution and clearer policy visibility.

Autos and EVs are bifurcated. Japanese OEMs with hybrid strength and localization optionality cushion margins against tariff risk, while Chinese EV leaders show impressive top‑line growth but heavy reinvestment and cash‑conversion strain. New‑energy entrants face competitive intensity, pricing pressure, and regulatory variability.

Banks and insurers display healthy ROEs and income support. Singapore and India franchises balance NIM normalization with fee growth and digital initiatives, while China banks offer very high yields but face property‑related credit and policy sensitivity. Japanese megabanks are leveraged to BOJ normalization and measured overseas growth.

Consumer staples and beverages offer defensive characteristics with mixed growth. Premium spirits deliver fortress economics despite slower volumes, while select FMCG names in Southeast Asia face weak growth and stretched payout ratios. Capital discipline and pricing power will determine total returns.

Conglomerates and investment holdings are increasingly tied to AI sentiment. Where leverage is high and new operating ventures are capital intensive, execution and funding costs dominate the equity case, raising dispersion around outcomes.

TOP 5 Investment Picks

Taiwan Semiconductor Manufacturing (2330.TW) offers best‑in‑class fundamentals leveraged to the AI cycle. Double‑digit growth, a roughly 50% operating margin, 42% profit margin, and cash of 2.63T against 1.01T debt provide rare capacity to fund leading‑edge nodes and advanced packaging while maintaining a disciplined dividend. Shares near 52‑week highs reflect momentum, but the balance sheet and execution track record argue upside can track earnings as capacity ramps and AI server demand persists. Policy/export risk is real, yet TSMC’s scale and customer entrenchment make it the region’s cornerstone compounder.

Advantest Corporation (6857.T) provides high‑beta exposure to AI and advanced‑node test intensity with superior economics. Revenue growth of roughly 90% year over year, operating margins near 47%, strong free cash flow, and modest debt position it to benefit as compute complexity lifts test content per device. The 52‑week share advance has priced in part of the cycle, but breadth of orders beyond a few hyperscalers, continued cash generation, and product leadership support further compounding through 2028, with solid buffers if capex pauses.

Samsung Electronics Co., Ltd. (005930.KS) couples cyclical recovery in memory and foundry with durable smartphone and device ecosystems. With 2024 revenue of $219B, earnings of $27B, and a strong backlog, Samsung is positioned to monetize AI‑PC and AI‑handset upgrades and a memory upcycle, while partnerships like the Nintendo SoC supply broaden end‑market exposure. Execution on premium devices and battery quality is a watchpoint, but diversified cash engines, scale in semis, and a historically conservative balance sheet support a favorable three‑year risk‑reward.

DBS Bank (D05.SI) offers resilient income and fee‑driven upside as NIMs normalize. A 51% profit margin, 16.81% ROE, low beta, and a forward yield around 5.2% anchor total returns, while tokenized structured notes and strong wealth/treasury franchises provide non‑interest income levers. Even with eventual rate cuts, DBS’s funding mix, digital execution, and capital discipline should sustain solid earnings and dividend growth. Balance‑sheet strength and brand trust reduce downside versus regional peers.

HDFC Bank Ltd (HDFCBANK.NS) remains a high‑quality compounder in India with scale, 13.9% ROE, stable margins, and a conservative 25% payout ratio. Post‑merger, funding‑cost control and deposit mobilization are the swing factors; if matched to loan growth, earnings compounding should continue. Trading near the upper half of its 52‑week range with low beta, HDFC offers steady multi‑year upside driven by market share gains, superior underwriting, and deepening fee businesses in a structurally growing economy.

Honorable mentions: BYD Company (1211.HK) for vertical EV/battery integration and 23% ROE despite cash‑conversion strain, Toyota Motor (7203.T) for hybrid leadership, localization and a covered 3%+ yield with low beta, Tencent Holdings (0700.HK) for scaled gaming/audio and optionality despite regulatory overhang, Tokyo Electron (8035.T) for tool intensity leverage once governance headlines clear, and Kweichow Moutai (600519.SS) for fortress margins and cash yielding defensive total returns as growth normalizes.

BOTTOM 5 Investment Risks

Unilever Indonesia (UNVR.JK) shows deteriorating fundamentals with quarterly revenue and earnings down, a thin current ratio of 0.50, and a forward payout of 110% that questions dividend sustainability. While the brand portfolio is valuable, negative 52‑week performance and tight cash metrics limit strategic flexibility. Without visible top‑line reacceleration and a reset to a sustainable payout, downside risk to both valuation and income persists.

XPeng Inc. (XPEV) faces a difficult EV backdrop marked by pricing pressure, mixed analyst sentiment, and investor de‑risking as evidenced by stakeholder selling. Despite delivery improvements and partnerships, profitability and cash generation remain unproven across cycles. At a recent price near $18 and with guidance contingent on innovation and scale efficiencies, execution risk and sector volatility cap near‑term investment appeal relative to better‑capitalized EV peers.

SoftBank Group Corp. (9984.T) has rallied on AI enthusiasm but carries material balance‑sheet and execution risk. Debt of ¥19.65T versus ¥4.19T cash and a current ratio of 0.84 constrain flexibility, while the pivot into AI server manufacturing adds operational complexity and capex needs. Equity marks tied to AI leaders can amplify drawdowns if sentiment turns. With shares near 52‑week highs, the bar for positive surprises is high and the downside from execution or funding frictions is nontrivial.

Industrial and Commercial Bank of China (1398.HK) offers an eye‑catching 11%+ forward yield at a roughly 47% payout, but policy‑driven NIMs, modest year‑over‑year contraction, and lingering property‑related credit risks make the income stream vulnerable. The stock’s range‑bound behavior suggests the market discounts these uncertainties. Without clear evidence of asset‑quality stabilization and durable dividend coverage through the cycle, risk‑adjusted return looks challenged.

Hyundai Motor Co. (005380.KS) sits at the nexus of EV strategy uncertainty and regulatory volatility. Legal tussles over 2035 EV rules, competitive intensity, and share price slippage from early‑year highs underscore fragile sentiment. While the company invests in EV capability, external policy swings and potential margin pressure present asymmetric risk versus peers with stronger hybrid bridges or superior vertical integration.

Watchlist risks: Alibaba Group Holding Ltd. (BABA) for sentiment, regulatory and competition headwinds, Tokyo Electron (8035.T) pending clarity on the leak investigation and demand timing, MediaTek Inc. (2454.TW) amid share‑price pressure and competitive dynamics despite favorable end‑market growth, Tencent Holdings (0700.HK) for China AI/data policy sensitivity, and Honda Motor Co., Ltd. (7267.T) given thin margins and recent earnings compression despite income support.

Key Investment Themes

AI infrastructure is the region’s dominant profit pool, favoring foundry, memory, and test suppliers with scale, margins, and balance‑sheet capacity to invest through cycles. Leaders capturing rising tool and test intensity should compound ahead of macro.

Policy and geopolitics remain central. Export controls, tariffs, and domestic regulatory regimes are primary valuation drivers for China tech and banks and for global autos. Companies with localization optionality and diversified demand are better insulated.

Cash conversion and balance‑sheet strength differentiate winners from headline‑driven rallies. Across EVs and AI hardware, heavy capex and working‑capital needs create execution cliffs; those with net cash, high ROIC, and disciplined payouts can sustain reinvestment and returns.

Income and defensiveness still matter. High‑quality banks in Singapore and India and premium consumer franchises in China and Japan can anchor portfolios with dividends and low beta, provided margins and asset quality remain resilient as rates normalize.

This article is not investment advice. Investing in stocks carries risks and you should conduct your own research before making any financial decisions. Note also that this review per region is based only on the companies followed in this magazine (see the Stocks in the Finance section).