Global Trade Optimism and Earnings Momentum: Strategic Entry Points in Asia-Pacific Equities

The Asia-Pacific region is witnessing a seismic shift in trade dynamics, driven by the strategic realignment of supply chains and the deepening integration of regional trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). These frameworks are not just reshaping global commerce—they're creating a fertile ground for high-growth, undervalued equities in sectors poised to capitalize on this new era of economic collaboration. For investors, this is a rare opportunity to identify stocks that combine structural tailwinds with robust earnings performance.

The Trade Agreement Tailwind: A Catalyst for Sectoral Growth

The CPTPP and RCEP have reduced tariffs, harmonized regulations, and streamlined supply chains across 21 economies, from Japan to Vietnam. By 2025, these agreements have already spurred a 38% increase in APAC business leaders' regional partnerships and a 30% reduction in export tariffs for member nations. The result? A surge in cross-border trade flows and a reinvigoration of sectors like logistics, financial services, and technology.

For instance, Singapore's logistics sector has grown by 10.2% year-on-year in Q2 2025, fueled by e-commerce expansion and front-loaded activity ahead of U.S. tariff deadlines. This growth is directly tied to Singapore's role as a CPTPP/RCEP hub, where companies like Global Logistic Properties (GLP) and Nuewing Logistics are capturing rising demand for warehousing and last-mile delivery infrastructure. GLP, a REIT with assets in RCEP-member markets, is a prime example of a firm leveraging trade liberalization to boost rental income and asset valuations.

Financial Infrastructure: The Quiet Powerhouses of APAC

Singapore's financial services sector is another beneficiary, with DBS Group (SGX: D05) and Oversea-Chinese Banking Corporation (OCBC) leading the charge. These banks are not just profiting from regional trade—they're enabling it.

• DBS Group reported 6% year-on-year total income growth in Q2 2025, driven by a 22% surge in fee and commission income from wealth management and digital banking. Despite a 2% drop in net profit due to the global minimum tax, the bank raised dividends to S$0.75 per share, signaling confidence in its earnings resilience. With a CET1 capital adequacy ratio of 17.6%, DBS is well-positioned to expand its cross-border trade financing and digital payment platforms, which are in high demand among RCEP beneficiaries.
• OCBC delivered 12% quarter-on-quarter net profit growth in Q1 2025, with non-interest income surging 36%. Its 13.0% return on equity and 0.9% non-performing loan ratio highlight its disciplined risk management. The bank's 7% year-on-year growth in customer loans and deposits underscores its ability to capitalize on regional trade financing opportunities.

High-Growth Sectors: Semiconductors and Defense in the AI Era

South Korea's strategic pivot to AI, defense, and high-performance computing (HPC) has positioned it as a key beneficiary of CPTPP/RCEP-driven supply chain reallocation. While Samsung Electronics faces short-term headwinds (projected 56% operating profit decline in Q2 2025), the broader sector remains robust.

• SK Hynix (KRX: 000660), for example, is dominating the HBM (High-Bandwidth Memory) market, with 57% market share in 2025. Its early delivery of 12-layer HBM4 chips to Nvidia and AMD has secured long-term contracts, driving revenue growth. At a P/E ratio of 18x, SK Hynix offers compelling value for investors betting on AI-driven demand.
• TSMC (TPE: 2330), the world's largest foundry, is another standout. Its Q2 2025 revenue rose 38.6% year-on-year to US$30.07 billion, with 60% of revenue from AI/HPC. TSMC's leadership in advanced node manufacturing (e.g., N2 process) ensures it remains a critical link in the global semiconductor supply chain.

Strategic Entry Points: Where to Allocate Capital

For investors seeking undervalued, high-growth opportunities in the Asia-Pacific, the following sectors and stocks merit attention:

1. Logistics and Infrastructure:
2. GLP (GLPG.SI): A REIT with exposure to RCEP-member markets, offering a 4.5% dividend yield and a P/FFO (funds from operations) of 12x.

3. SATS (S58.SI): A logistics and aviation firm benefiting from post-pandemic trade recovery and RCEP-enabled customs efficiency.

4. Financial Services:

5. DBS Group (D05.SI): A digital banking leader with a P/B (price-to-book) ratio of 1.2x and strong regional trade financing exposure.

6. OCBC (O38.SI): A high-return bank with a CET1 ratio of 17.6% and a dividend yield of 3.8%.

7. Semiconductors and AI:

8. SK Hynix (000660.KS): A HBM leader with 18x P/E and strong AI infrastructure demand.
9. TSMC (2330.TW): A foundry powerhouse with 58.6% gross margins and a 30%+ revenue growth trajectory.

Risks and Mitigation

While the outlook is optimistic, risks remain:
- U.S.-China tensions and potential tariffs could disrupt supply chains.
- Currency volatility in the region (e.g., the yen's weakness) may pressure Japanese exporters.
- Geopolitical shifts (e.g., U.S.-Japan trade negotiations) could alter trade flows.

To mitigate these, investors should:
- Diversify across sectors (e.g., logistics + financials + semiconductors).
- Hedge currency exposure for Japanese and South Korean equities.
- Monitor policy developments in key markets like Singapore and South Korea.

Conclusion: A Golden Opportunity in APAC Equities

The confluence of CPTPP/RCEP trade agreements, AI-driven demand, and structural supply chain shifts has created a rare inflection point in the Asia-Pacific. For investors willing to act decisively, stocks like DBS Group, SK Hynix, and GLP offer a compelling mix of earnings resilience, valuation appeal, and long-term growth potential. As the region continues to redefine global trade, these names are not just surviving—they're thriving.

Final Note: The data and analysis presented here are derived from Q2 2025 earnings reports and trade dynamics. As always, conduct due diligence and align investments with your risk tolerance and time horizon.