In its latest market outlook, Goldman Sachs indicates that while Asian equities have already seen significant gains in the first half of 2026, the upward momentum is not yet exhausted. The core driver for further market performance is expected to be corporate earnings growth.
The bank's mid-year strategy advises investors to continue holding leading markets and sectors rather than shifting to relatively underperforming areas, explicitly advocating to "stick with the winners." The report suggests the current market is running more on earnings improvement than valuation expansion, with approximately 80% of the region's gains year-to-date explained by earnings growth or upward revisions to profit expectations, indicating capital is concentrated on improving fundamentals.
Regarding asset allocation, Goldman Sachs maintains an overweight stance on North Asian markets, specifically including South Korea, Japan, and Chinese A-shares. Its preferred sectors are concentrated in technology hardware, capital goods, and banking.
On thematic drivers, the bank emphasizes that structural factors such as artificial intelligence, power infrastructure, and defense spending continue to play significant roles. "The semiconductor memory supercycle is one of the strongest and most prominent themes currently, and it is still not fully priced in by the market," a Goldman Sachs analyst noted.
Concerning earnings expectations, Goldman Sachs forecasts that the MSCI Asia Pacific ex-Japan Index will achieve 60% earnings growth in 2026, followed by a further 22% growth in 2027. Based on this, the index is projected to deliver double-digit returns in the second half of the year.
Structural Demand Extends to Commodity Allocation
Echoing its equity market views, Goldman Sachs believes the same long-term drivers support the case for commodity allocation, particularly in metals. Despite the Strait of Hormuz resuming navigation after months of disruptions and a subsequent retreat in oil prices, the bank still recommends investors maintain a diversified portfolio.
Strategists point out, "We believe the Iran conflict ultimately reinforces themes more supportive of power and metals demand than of oil and gas themes." In their view, the impact of geopolitical events is shifting from traditional energy towards broader infrastructure and resource needs.
Specifically, sustained investment around energy security, AI infrastructure, electrification, and defense spending is expected to drive demand for industrial metals, including copper, lithium, and aluminum, while also propelling capital expenditure in grid and power generation sectors.
Goldman Sachs anticipates that, against the backdrop of accelerating investments in grid construction, renewable energy, electric vehicles, defense, and data centers, copper demand growth will continue to outpace mined supply for several years. Based on this assessment, the bank has raised its year-end 2026 London Metal Exchange copper price forecast to $13,735 per tonne and maintains its previous view that copper prices may need to rise to around $15,000 by 2035 to stimulate sufficient new supply.
Gold Allocation Thesis Remains Supported
In the precious metals space, Goldman Sachs continues to hold a positive view on gold. Although the gold price has risen significantly since 2022, the bank believes its allocation value persists.
According to its forecasts, the gold price could reach $4,900 per ounce by the end of 2026. The primary supporting factors stem from continued gold accumulation by emerging market reserve management bodies, aiming to diversify away from traditional reserve assets.
The report also mentions that while rising interest rates may temporarily dampen some investment demand through the ETF channel, medium-term support for gold prices will likely come from geopolitical uncertainty and concerns over fiscal sustainability.
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