Oct 22, 2026
Finding opportunities in Asia equities amid the selloff
Where to find income outside the U.S.
As U.S. cash rates continue to fall, it has become challenging for investors to find high and stable income for portfolios. This is even more difficult outside the U.S., as developed market yields are generally lower. While some emerging markets present attractive income opportunities, they tend to be characterized by higher volatility. However, there are some potentially overlooked sources of income that investors can tap on. In today’s note, we explore how Asian markets can be a useful source of attractive, diversified and steady income for portfolios.
The case for Singapore
The Singapore equity market presents a compelling combination of stable dividend income, attractive value and secular growth opportunities. Surprisingly to many investors, the Singapore equity market have demonstrated outperformance even against the S&P 500 in both USD and SGD terms in recent years, and with lower volatility.
The Straits Times Index (STI) has outperformed the S&P 500 over the past 5 years in both SGD and USD terms
Total return, indexed 12/31/2020 = 100
Source: Bloomberg Finance L.P. Data as of February 2026. Dividend return = cumulative gross total return – cumulative price return
Dividend income has historically been a meaningful and consistent driver of total returns in Asian equity markets, accounting for ~50% of long-term performance, within which Singapore equities stand out. The market has traditionally been anchored by its financial, real estate and telecommunications sectors, which together make up roughly ~75% of the benchmark Straits Times Index. These defensive, steady local champions, characterized by predictable cash flows and strong capital discipline, form the bedrock of the index and underpin its appeal to income-oriented investors seeking steadier return profiles. Against an accommodative macro backdrop, real estate and REITs are seeing relief through lower interest rates and improved distribution per unit (DPU) growth, while banks are benefitting from strong flows into wealth management revenue.
Dividends contribute close to ~50% of long-term performance for Asia ex-Japan equities
MSCI AC Asia ex-Japan cumulative price return and dividend return, indexed to 2006
Source: Bloomberg Finance L.P. Data as of February 2026. Dividend return = cumulative gross total return – cumulative price return
In recent years, the broad wave of corporate governance and capital market reforms across the region (e.g. South Korea’s Corporate Value-up Program, Japan’s market reforms) is also providing a supportive policy tailwind, with Singapore very much part of that shift.
Earlier this year, the Monetary Authority of Singapore (MAS) announced that it plans to expand the Equity Market Development Plan (EQDP) from S$5 billion to S$6.5 billion, which forms part of a broader set of initiatives aimed at strengthening the competitiveness of the local equity market. The review group highlighted two structural issues: 1) A well-functioning equity market being key to support the growth of local enterprises, and 2) the Singapore equity market has seen fewer high-quality listings and a decline in trading volumes in recent years, as capital shifted to larger global exchanges. EQDP specifically aims to address these challenges by encouraging greater retail and institutional participation, deepening trading liquidity across the market, and broadening investor engagement beyond large-cap stocks. Under the program, the MAS plans to invest into strategies run by Singapore-based asset managers with a tilt towards small and mid-cap companies, albeit without a specified minimum percentage requirement. With the second cohort recently announced, the total allocation now amounts to S$3.95b across nine managers. A renewed focus on value and non-large-cap segments, alongside incremental capital channeled through the EQDP, could help Singapore equities continue along a gradual re-rating path and narrow the valuation discount relative to developed market (DM) peers.
A stronger emphasis on shareholder discipline is likely to translate into higher dividend payouts and improved capital efficiency, improving the return on equity (ROE) for Singapore equities over time, where dividend yields of ~4.7% currently rank among the highest in DM.
Growing dividend payouts can support higher Return On Equity (ROE) in Singapore stocks
Sources: J.P. Morgan Asset Management, Refinitiv, Morgan Stanley Research. Data as of June 2025. FTSE STI Index dividend payout ratio (consensus next twelve months, in %).
With the year-to-date outperformance, valuations are at a premium to historical averages but remain reasonable relative to global markets. While the FTSE Straits Times Index trades at ~15x FY27e with an expected an EPS growth rate of ~7% over the next two years, high dividend income, and improving shareholder returns could help justify that premium.
Investments into Singapore equities also come with the benefit of global FX diversification through the Singapore dollar (SGD). This is one of only a small handful of currencies that have appreciated against the USD over the past 50 years. While it may be speculative to contemplate the long-term value of the currency (some analysts have pointed to potential parity with the USD), the Monetary Authority of Singapore’s (MAS) strong commitment to price stability and gradual appreciation of the SGD, underpinned by ample official foreign reserves, have kept the currency on a stable strengthening trend. While we see limited upside for SGD in the near-term, the currency continues to benefit from very low levels of volatility and remains attractive to regional investors as a relative ‘safe haven’.
A differentiated take on Asia equities
Beyond Singapore, the appeal of Asia EM equities is increasingly evident in 2026, and global investors are taking notice. Within the MSCI Asia ex-Japan Index, Taiwan, South Korea, China and India dominate, collectively accounting for over 85% of the index’s weighting. Historically, these markets (excluding China) have demonstrated consistent earnings delivery, with India, Taiwan, and South Korea posting average earnings growth of 19%, 20%, and 28% respectively over the past five years. This track record is expected to continue into 2026.
Some of the biggest markets in MSCI Asia ex-Japan are all expected to accelerate earnings growth in 2026
Earnings growth (%)
Sources: MSCI, Bloomberg Finance L.P. Data as of February 2026.
The pivotal roles of Taiwan and South Korea in the global AI supply chain have led to substantial upgrades in earnings forecasts for both markets since the end of last year. For Taiwan, 2026 EPS estimates have been raised by around 10% since January, while Korea’s estimates have surged by roughly 50%, owing to the robust expansion in the global memory market.
Earnings revisions have drastically improved for Taiwan and Korea
Year-to-date earnings revisions, CY26, CY27
Sources: Bloomberg Finance L.P. Data as of February 2026. CY = Calendar Year.
India and China, after a fundamentally sluggish 2025, look ready to narrow their gaps with the broader region. In India, more accommodative monetary and fiscal policies are supportive for economic growth.
Despite an uncertain trade outlook with the U.S., India’s domestic-focused economy can provide buffers against material external shocks. China, as the largest constituent of the index, remains central to Asia EM. Although the economically- important real estate sector has yet to signal a definitive trough, the easing of price competition among the nation’s internet giants and accelerated AI adoption could support a recovery in earnings for 2026. In tandem, China’s extensive catalog of companies with high dividend yields is an effective tool that income-seeking investors can add to their portfolios.
Putting the pieces together, MSCI Asia ex-Japan is positioned to deliver earnings growth exceeding 30% this year – twice the rate of developed markets. Meanwhile, the relative valuation discount of Asia EM vs global DM is a further 5% lower than the average of the past decade, underscoring the region’s compelling value even after the recent outperformance.
Compared to developed markets, Asia EM present attractive dividend yields alongside higher volatility – making the region a favorable playground for option strategies. In particular, the Korean and offshore Chinese markets stand out with pronounced implied volatility and strong liquidity. These characteristics provide compelling opportunities for investors to capitalize on collecting option premiums, both to boost income and mitigate overall portfolio volatility.
Other relevant opportunities
Emerging markets (EM): Our positive view on Asia ex-Japan equities supports our broadly constructive view on EM equities for the following reasons. A structural change in the makeup of the market with a shift from Latin America (commodity-focused) to Asia (technology-focused) which has grown from a 50% to 77% share of EM over the past decade. A relatively weaker USD environment has supported EM performance, alongside substantial global fund inflows into EM assets.
We see opportunities within fixed income as well, especially in dollar-denominated emerging market debt (EMD) as local currency EMD often suffers from high FX volatility. A relatively weaker USD, stronger EM economic growth and stronger credit fundamentals (especially in the high yield market) support the case for EMD.
Australia: Within developed markets, Australian fixed income stands out as one of the few markets where investors can find similar yields to the U.S., while we maintain a positive outlook on the AUD due to its carry advantage. We cover the opportunity in Australia in more detail here.
- Source: Bloomberg Finance L.P., J.P. Morgan Private Bank. Data as of February 2026.
Key Risks
For illustrative purposes only. Estimates, forecasts and comparisons are as of the dates stated in the material. Indices are not investment products and may not be considered for investment.
All market and economic data as of February 2026 and sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.
Past performance is not a guarantee of future returns and investors may get back less than the amount invested.
JPMAM Long-Term Capital Market Assumptions
Given the complex risk-reward trade-offs involved, we advise clients to rely on judgment as well as quantitative optimization approaches in setting strategic allocations. Please note that all information shown is based on qualitative analysis. Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. Note that these asset class and strategy assumptions are passive only – they do not consider the impact of active management. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The outputs of the assumptions are provided for illustration/discussion purposes only and are subject to significant limitations.
“Expected” or “alpha” return estimates are subject to uncertainty and error. For example, changes in the historical data from which it is estimated will result in different implications for asset class returns. Expected returns for each asset class are conditional on an economic scenario; actual returns in the event the scenario comes to pass could be higher or lower, as they have been in the past, so an investor should not expect to achieve returns similar to the outputs shown herein. References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making a decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact the future returns. The model assumptions are passive only – they do not consider the impact of active management. A manager’s ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control.
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Diversification and asset allocation does not ensure a profit or protect against loss.
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Index definitions:
S&P 500: A free‑float market‑cap‑weighted index of 500 leading U.S.-listed large‑cap companies designed to represent the performance of the U.S. equity market.
Straits Times Index: Singapore’s headline equity benchmark, comprising the 30 largest and most liquid companies listed on the Singapore Exchange and weighted by free‑float market cap.
MSCI Asia ex-Japan Index: A free‑float market‑cap‑weighted index of large and mid‑cap equities across developed and emerging Asian markets excluding Japan.
MSCI China: A free‑float market‑cap‑weighted index of large and mid‑cap Chinese equities across eligible listings and share classes.
MSCI Taiwan: A free‑float market‑cap‑weighted index capturing large and mid‑cap Taiwanese equities to represent the investable Taiwan market.
MSCI Korea: A free‑float market‑cap‑weighted index covering large and mid‑cap South Korean equities that reflect the country’s investable universe.
MSCI India: A free‑float market‑cap‑weighted index of large and mid‑cap Indian equities designed to represent the investable Indian market, subject to foreign ownership limits.
Important Information
Steady income is scarce as U.S. cash rates fall and DM yields compress; EMs offer yield with more volatility. Asia is an overlooked, diversified source of durable income.
Weiheng Chen
Global Investment Strategist
Published Feb 26, 2026
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