Policy easing fuels optimism in Asian EM equities despite political headwinds

Wed, Sep 17, 2025, 10:22 AM 2 min read

By Ankika Biswas

(Reuters) -Investors are extending bullish bets on Asia’s emerging equities as prospects of further monetary easing outweigh domestic risks, fund managers said this week.

A dovish Federal Reserve gives Asian central banks more flexibility to ease policy without stoking currency pressures, Gary Tan, portfolio manager at Allspring Global Investments, told the Reuters Global Markets Forum.

Markets expect around 67 basis points (bps) of Fed rate cuts by the year-end, including a 25-bps reduction on Wednesday, according to LSEG IRPR data.

Asian central banks have signalled and delivered rate cuts in recent months in response to softening growth, despite bouts of political turmoil, said Naomi Fink, chief global strategist at Amova Asset Management.

Indonesia, Thailand and the Philippines cut rates in their latest policy meetings, while South Korea flagged further easing to counter tariff-related hits to growth. There is also some room for cuts in India, though China may resist further easing in the near-term after reductions earlier this year.

"This is a good place to be in, and supportive of equity markets," said Fink, whose firm managed over $260 billion in assets as of June 2025.

Tan, whose firm manages $610 billion, said he expects positive fundamentals in Southeast Asian companies, particularly in Indonesia and Thailand, to add impetus to the bullish case, supporting his "anti-consensus" "overweight" view on the region.

Most Asian EM indexes have been on record runs, notably South Korea and Taiwan. The MSCI Asia ex-Japan index closed Wednesday at an all-time high, versus S&P 500's year-to-date gain of around 12%.

Investors remain upbeat on India due to its growth narrative and South Korea for its "Value-Up" programme that encourages measures to unlock shareholder value.

"India has been and continues to be one of our preferred markets," said Stephen Parker, co-head of global investment strategy at J.P. Morgan Private Bank, highlighting the country's secular growth and powerful earnings story.

Allspring's Tan said his firm remains "constructive" on the 'value-up' theme in South Korean shares, supported by corporate governance reforms and structural growth drivers.

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(Reporting by Ankika Biswas and Mehnaz Yasmin in Bengaluru; Editing by Divya Chowdhury and Tasim Zahid)