DBS Bank’s research team forecasts a stable economic outlook for Asia and ASEAN in 2026, even with global trade tensions. As 2025 wraps up, companies feel relieved after initial concerns over international trade. US trade restrictions vary, with different rates and exemptions still being negotiated. However, US consumers continue to spend, leading to strong export growth from several Asian countries to the US.

Trade Outside The United States

Trade Outside the United States (TOTUS) plays a vital role in Asia’s economic strength. Countries like Malaysia, Singapore, and Vietnam have seen record levels of foreign direct investment (FDI), and growth is expected to continue in 2026 and beyond. Favorable monetary conditions, alongside stable food and fuel prices, support this optimistic outlook. As we move into the New Year, general anxiety has eased significantly. As we close out 2025, fears of a global trade collapse have not come to pass, leading to a sense of cautious relief. This lower level of anxiety may mean reduced market volatility in the coming weeks. We believe that selling options to collect premiums could be a smart strategy, capitalizing on expected lower price fluctuations as we start the new year. The resilience is also supported by unexpectedly strong US consumer spending, as indicated by last week’s US retail sales report for November, which showed a 0.8% increase, exceeding predictions. Asian exporters directly benefit, with countries like South Korea noting a 12% year-on-year rise in exports to the US last month. Because of this, we see potential in buying call options on export-focused indices in markets such as Taiwan and South Korea.

Investment Flow Recalibration

There is a notable shift in investment flows, with foreign direct investment (FDI) moving into Southeast Asia. For instance, recent data from Vietnam reveals that disbursed FDI through November has already set a new annual record for 2025. This trend favors bullish positions on ETFs that focus on the markets of Vietnam, Malaysia, and Singapore. Growth in Trade Outside the United States, or TOTUS, helps insulate the region from political pressures. This trend reflects what we saw after the 2018 tariffs, which sped up supply chain shifts that benefitted the ASEAN bloc. This strength supports our belief in long positions in regional currency futures, particularly the Singapore Dollar. Favorable monetary conditions, with low food and fuel inflation across most of the region, create a stable environment. This means regional central banks are unlikely to enforce aggressive monetary tightening soon. For derivative traders, this points to strategies that thrive on stable or rising equity prices, like bull call spreads on major ASEAN indices. Create your live VT Markets account and start trading now.

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