Goldman Sachs Flags AI and Energy as Drivers of Asian Market Split

Goldman Sachs is warning that a deepening gulf between northern and southern Asian equity markets is reshaping the regional investment landscape, CNBC reported Tuesday.

Goldman Sachs Chief Asia Pacific Equity Strategist Tim Moe argued that North Asian markets benefit from stronger fiscal capacity, larger energy buffer stocks, and growing exposure to artificial intelligence themes. South Asian markets, by contrast, lack the financial headroom to absorb rising energy costs and carry little technology representation.

A Continent Divided by Tech and Energy

Moe described the outperformance of North Asian benchmarks as “massive” relative to their southern counterparts. Markets including Indonesia have fallen roughly 25% this year, weighed down by energy import exposure and thin tech representation. Meanwhile, South Korea’s benchmark index has surged more than 80% year-to-date, making it among the strongest-performing equity markets globally. Taiwan has followed closely behind, supported by semiconductor and hardware demand tied to the AI buildout.

Technology stocks dominate these northern indexes heavily. Moe noted that tech-oriented names account for roughly 80% of Taiwan’s index, around 60% of South Korea’s, and close to 30% of Japan’s. That concentration is drawing investor attention toward AI-linked hardware and chip producers across the region.

Background: Valuations and the China Story

Despite the rally, Moe flagged a cautionary note on Korean semiconductor names such as Samsung Electronics and SK Hynix. Both trade at roughly five to six times current-year earnings, a multiple that implicitly signals the market doubts whether peak profitability will persist. The compressed valuation reflects lingering uncertainty rather than outright confidence.

In China, Moe sees mainland-listed A-shares, up around 10% year-to-date, outpacing Hong Kong-listed H-shares meaningfully. He cited clear policy support for China’s domestic equity market and pointed to two consecutive months of positive producer price index readings as evidence that China is exiting more than three years of deflation. H-shares are lagging partly because heavyweight internet stocks sit at the softer end of the AI trade, while investor attention has shifted upstream toward hardware.

Summer Correction Risk Looms

Moe reserved his sharpest warning for energy markets. He argued that when the full impact of an energy supply shock arrives, markets may face a sharp reality check. He suggested the summer months could bring some form of correction, a risk he described as one Goldman is watching carefully.

On geopolitics, Moe told CNBC that last week’s meeting between Chinese President Xi Jinping and U.S. President Donald Trump did no harm to sentiment. Calm in the bilateral relationship, he suggested, was welcomed by investors on both sides of the Pacific.

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