Asian equities recovered strongly; performance uneven beneath the surface

Manager Comments

Asian equity markets (MSCI Asia ex Japan Index, SGD terms) gained 2.0 percent in December, recouping much of November’s losses and ending 2025 near record highs. Gains were driven mainly by South Korea, Taiwan, China and ASEAN. There was a brief period of volatility as the Hong Kong markets dipped on renewed concerns about China’s economy, but this was offset by a surge in AI-related tech stocks. 

South Korea: Chip led outperformance 

South Korea’s market outperformed as SK Hynix surged nearly 23 percent and Samsung Electronics gained 19 percent, fuelled by a rebound in AI chip demand and improving sentiment. 

Taiwan: Strength on extended AI demand 

Taiwan equities mirrored Korea’s trajectory, with strong momentum among leading chipmakers on sustained AI related semiconductor demand. 

Hong Kong and China: Divergent paths 

Hong Kong’s market slipped as pharmaceutical and biotech names declined sharply alongside several large cap banks. 

Mainland China equities posted modest gains despite fresh signs of stalling economic growth. Investment decelerated sharply, money supply contracted, and retail sales growth cooled. Industrial output grew 4.8 percent, below forecasts and October’s pace. While a statistical correction and the end of a white goods incentive scheme may have skewed some prints, economists cautioned that industrial sectors could face more pressure next year from rising trade barriers. 

Inflation trends were mixed. The Consumer Price Index (CPI) rose to a 21 month high, core inflation steadied, while the Producer Price Index (PPI) deteriorated. New home prices fell again. 

On the positive end, exports rebounded after October’s surprise dip and imports rose, delivering a year to date trade surplus above US$ 1 trillion. December’s official and private manufacturing Purchasing Managers’ Indexes (PMIs) expanded for the first time in months, defying expectations of further contraction. 

ASEAN: Malaysia and Singapore shine 

In contrast, ASEAN markets proved more resilient. Indonesia’s benchmark reached record highs, while Singapore, Malaysia, and the Philippines also posted advances, with the latter breaking a six-month losing streak. 

Malaysia surprised with strong gains on robust economic indicators signalling continued growth, while Singapore’s Straits Times Index (STI) also registered notable gains to end near record highs. 

India: Pressure from outflows and currency weakness 

India’s NSE Nifty 50 (Nifty) and S&P BSE Sensex (Sensex) fell amid continued foreign investor outflows and a record low rupee, dampening risk appetite. 

Other market highlights 

China left its 1 year and 5 year Loan Prime Rates unchanged as expected, while the US delayed new tariffs on chip exports to China for another 18 months. 

November exports from Singapore, South Korea, Taiwan, and India beat forecasts despite US tariff headwinds. However, PMI data for the month showed further manufacturing contraction in South Korea, Taiwan, and China, slower growth in India, and expansion across ASEAN. 

Indonesia and the US prepared to sign a full trade agreement in late January 2026. 

Thailand dissolved parliament, triggering elections by end January 2026. Meanwhile, its border tensions with Cambodia eased after a ceasefire. 

AI-Augmented Asia Solutions

• Above benchmark: In December 2025, the Fund rose 3.87 percent, outperforming the benchmark by 1.87 percent.

^{Source: Morningstar. Performance as of 31 December 2025, SGD basis, with dividends and distributions reinvested, if any. Fund refers to United Asia Fund – A SGD Acc. Benchmark: April 1992 – December 2011: MSCI AC FE ex-Japan; January 2012 to present: MSCI AC Asia ex-Japan. Performance figures for 1 month till 1 year show the per cent change, while performance figures above 1 year show the average annual compounded returns.}

• Tech and Materials led gains: Most of the outperformance arose from our exposure to China and Taiwan tech as well as China and India materials.
• Tech strength led by AI capex theme: The AI-driven capex cycle continued to support Asian tech performance. However, sub-sector performance began to diverge, with memory supply chain players leading gains. These include heavyweights in Korea such as Samsung Electronics and SK Hynix, which dominate in DRAM, NAND, and HBM globally. We also benefited from Taiwan companies exposed to niche material shortages and Chinese firms in the AI supply chain, especially in the area of optical components used in AI servers.
• Commodities theme gaining traction: A second strong theme emerged around commodity shortages. While gold and silver posted significant gains in 2025, we see growing demand-supply mismatches in industrial metals like aluminium and copper. Leveraging our AI model, we increased exposure to gold stocks in China and aluminium stocks in India during the month.

^{Source: Morningstar. Portfolio rebalancing as of 31 December 2025. Benchmark allocation as of 31 December 2025}

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• Above benchmark: The Fund gained 2.20 percent in December 2025, above the benchmark’s return of 0.77 percent.

^{Source: Morningstar. Performance as of 31 December 2025, SGD basis, with dividends and distributions reinvested, if any. Fund refers to United Greater China Fund – A SGD Acc. Benchmark: MSCI Golden Dragon Index. Performance figures for 1 month till 1 year show the per cent change, while performance figures above 1 year show the average annual compounded returns.}

• Tech and Materials led gains: Similar to the United Asia Fund, most of the outperformance arose from our exposure to China and Taiwan tech as well as China and India materials. 
• Hong Kong financials a short-term drag: Our overweight in Hong Kong detracted from performance. We are positioned in Hong Kong banks, trading at 0.3x – 0.4x price-to-book and offering 5–7 percent dividend yields, as well as other companies poised to benefit from a potential recovery in the Hong Kong economy. We believe that expected US rate cuts in the year ahead should provide a tailwind.
• Commodities exposure and outlook: We maintain exposure to gold miners and are evaluating opportunities to increase allocations to other commodities, given emerging supply-demand imbalances.

^{Source: Morningstar. Portfolio rebalancing as of 31 December 2025. Benchmark allocation as of 31 December 2025. Note: Differences in country allocation between the Fund and Benchmark may arise from differing country classification methodologies which define Hong Kong-listed Chinese companies differently}

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• Above benchmark: In December, the Fund returned 2.59 percent, outperforming the benchmark by 1.34 percent, mainly due to strong security selection.

^{Source: Morningstar. Performance as of 31 December 2025, SGD basis, with dividends and distributions reinvested, if any. Fund refers to United ASEAN Fund – A SGD Acc. Benchmark: Jun 86 - Jan 93: 100% DBS 50; Feb 93 - Aug 98: 50% DBS 50, 50% KLEMAS; Sep 98 - May 00: 100% DBS 50; June 00 - May 06: 50% STI Index, 50% KLEMAS; June 06 - June 13: 50% STI Index, 50% KLCI; Jul 13 - present: MSCI ASEAN. Performance figures for 1 month till 1 year show the per cent change, while performance figures above 1 year show the average annual compounded returns.}

• Key contributors and detractors: Top relative performers included Archi Indonesia, Mobile World Group, and Capital A, while Keppel REIT, Bumitama Agri, and Military Commercial Bank were the main laggards. Archi Indonesia benefited from strength in gold prices, while Capital A saw gains on progress with its restructuring plan.
• Portfolio actions: We increased exposure to Indonesia and Malaysia in line with our AI engine recommendation, funded by reductions in Thailand. In Indonesia, we added Archi Indonesia as a gold proxy. For Malaysia, we increased allocations to consumer and financials, which benefited from December’s seasonal market strength.

^{Source: Morningstar. Portfolio rebalancing as of 31 December 2025. Benchmark allocation as of 31 December 2025}

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