Asia Pacific equities excluding Japan rose 32% in USD terms last year. That was their best annual result since 2017. This happened even with trade and geopolitical tensions, and higher policy uncertainty.
The rise was helped by a weaker US dollar, tariff rates that were lower than feared, and a US–China trade truce. The report says recent gains are now being driven more by regional fundamentals.
Regional Fundamentals And Reform Momentum
The report highlights macro reforms and economies that have reduced risks as key supports. It also points to a positive outlook for GDP and corporate profits, resilient domestic demand, and progress on regional trade integration.
It links the region to the tech and AI cycle. It notes strength in semiconductor manufacturing in Taiwan and South Korea. It also says Asian countries are among the top global contributors to the GitHub code repository.
It adds that India and south-east Asian economies, including Singapore, Malaysia, and Vietnam, play roles across the AI supply chain, from assembly to data centres. It also says mainland China’s tech progress is tied to policy plans focused on AI, EVs, green energy, and advanced manufacturing.
We are seeing strong fundamentals take centre stage in Asian markets. This builds on 2025, when Asia Pacific stocks ex-Japan gained 32%, their best performance in years. Derivative traders may want to position for more upside by considering call options on broad regional ETFs that capture this diversified growth.
Options Positioning For The Ai Tailwind
The AI supercycle remains a main catalyst, with Asia dominating key parts of the semiconductor market. Data from early February 2026 shows global semiconductor sales for January rose 22% year-over-year. Taiwanese and South Korean firms led this growth, supported by steady AI-related demand. This may support buying near-term call options on country-specific ETFs such as the iShares MSCI Taiwan ETF (EWT) for leveraged exposure to this tailwind.
The AI theme is also spreading to other economies like India and Vietnam. These markets matter for assembly and data centre operations. Indian IT services firms have just completed an earnings season where Q4 2025 results mostly beat estimates, driven by new AI integration contracts. This helped the NIFTY 50 reach new highs last week. We believe bull call spreads on selected Indian technology stocks could be a cost-effective way to take part in this trend.
Policy-driven growth is also important, especially in mainland China, where Beijing has repeated its focus on AI, EVs, and advanced manufacturing. Even with this positive backdrop, valuations across the region still look attractive. The MSCI AC Asia ex Japan Index trades at a forward price-to-earnings ratio of 14, well below the S&P 500’s 21. With this valuation buffer, selling cash-secured puts on selected high-quality names could be one way to generate income.
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