Navigating Asia-Pacific's New Trade Landscape: Where to Find Resilience and Reward

The U.S.-China trade war has reshaped Asia-Pacific’s economic terrain, creating stark divergences between regions and sectors. While Japan’s economy stumbled in early 2025, other markets are carving out paths to growth amid shifting supply chains and currency dynamics. Investors must look beyond headline numbers to uncover underappreciated equities in tech, finance, and logistics that are poised to thrive in this fractured landscape.

The U.S.-China Tech Divide: Semiconductor Suppliers as Unseen Winners

The U.S. semiconductor export curbs have paradoxically accelerated China’s self-reliance push, creating a goldmine for niche players. While Huawei’s breakthroughs in chip design and Alibaba’s RISC-V CPU gains dominate headlines, the real opportunity lies in semiconductor equipment and materials suppliers that benefit from China’s urgent need to bypass U.S. tech.

Japanese firms like Tokyo Electron and South Korean giants like Samsung are critical to China’s domestic chip ambitions, even as they navigate U.S. restrictions. Their equipment and materials are indispensable for Beijing’s foundries, ensuring steady demand despite geopolitical headwinds. Meanwhile, smaller players such as Fujifilm (FGMXY), a key supplier of photomasks, and SK Materials (SKMLF), which produces advanced substrates, are flying under the radar but delivering robust margins.

The smuggling of banned chips into China also highlights a lucrative underground market. Investors should monitor equities like Ningbo Joyson (JOYCY), a supplier to smuggled chip buyers, and SMIC (SMICY), which is racing to close the gap in advanced nodes.

Japan’s Economic Shift: Yen Weakness Fuels Export-Driven Rebound

Japan’s 0.2% Q1 contraction masks a deeper story. The yen’s resilience—bolstered by BOJ rate hike expectations—has defied forecasts of a sharp depreciation. Yet, the weak yen remains a tailwind for exporters.

While automakers like Toyota (TM) and electronics firms like Sony (SNE) are obvious beneficiaries, the real upside lies in industrial machinery and robotics. Companies like Fanuc (FANUY) and Mitsubishi Heavy Industries (MHVYY) are capitalizing on rising demand for automation in Southeast Asia’s factories, which are relocating production to avoid U.S.-China tariffs.

The BOJ’s hinted rate hikes to 1% by mid-2025 also favor financials, such as Mitsubishi UFJ Financial Group (MTU), which will benefit from higher net interest margins.

Rate-Sensitive Markets: Indonesia’s Financial Sector Gains

Indonesia’s 6.2% growth in 2025, despite regional headwinds, is underpinned by robust domestic demand and a resilient financial sector. Bank Central Asia (BBCA) and Bank Mandiri (BMDRY) are leveraged to capitalize on rising rates and credit expansion.

With inflation at 3.5%—below the central bank’s target—the rupiah’s stability and low funding costs position Indonesia as a haven for yield-seeking investors.

Regional Supply Chain Reconfigurations: Logistics and Tech Integration

The RCEP trade pact is accelerating intra-regional trade, with ASEAN logistics firms like J&T Express (JTOOF) and Ninja Van (a Singapore-based startup) gaining traction. These companies are critical to China’s “nearshoring” to Southeast Asia, which avoids U.S. tariffs while retaining cost advantages.

In digital infrastructure, Singtel (SING.SI) and SoftBank (SFTBY) are expanding cloud and AI capabilities to serve enterprises migrating supply chains to Asia.

Conclusion: Strategic Allocation for the New Trade Era

The Asia-Pacific’s divergence is a strategist’s dream. Investors should:
1. Overweight semiconductor suppliers (Tokyo Electron, SK Materials) riding China’s tech resurgence.
2. Buy yen-sensitive industrials (Fanuc, Mitsubishi Heavy) and Japan’s financials (Mitsubishi UFJ).
3. Allocate to Indonesia’s banks (BBCA) and RCEP logistics leaders (J&T Express).

The U.S.-China trade war isn’t just about losers—it’s about winners who adapt to the new rules. Act now to position portfolios for this fractured, yet dynamic, landscape.

Act strategically. The next phase of growth is already here—just look where to find it.