Goldman Sachs has upgraded its view on Indian equities, turning more optimistic about the country's stock market as it expects earnings growth to support a strong recovery in Asian shares next year. The Wall Street investment bank has raised India to overweight from its earlier allocation, according to a Bloomberg report.
It has also upgraded Chinese H-shares to overweight, while lowering its ratings on Taiwan and China A-shares to market weight. Goldman Sachs continues to favour South Korean and Japanese equities, retaining overweight ratings on both markets. The bank expects the MSCI Asia ex-Japan Index to deliver a 19% return in US dollar terms in 2027, with stronger corporate earnings providing the main impetus.

The forecast is for the regional benchmark as a whole and does not represent a return projection for Indian equities alone. Analysts led by Timothy Moe said recent market corrections had created a more favourable entry point for investors, even though the outlook for next year was not as strong as previously anticipated.
They also pointed to attractive valuations, although opportunities differ considerably across markets in the region. The MSCI Asia ex-Japan Index has declined around 13% from its record high in June, as investors pared back positions in technology stocks amid concerns over the sustainability of the artificial intelligence-led rally.

Despite the correction, the index remains up approximately 11% in dollar terms this year, supported largely by gains in South Korea and Taiwan. Goldman Sachs, however, cautioned that the road ahead could be volatile. It expects economic growth to moderate across much of Asia in 2027, with the possibility of further US Federal Reserve interest rate increases posing an additional risk.
The bank also flagged uncertainty around artificial intelligence investments. While spending on AI infrastructure is expected to increase further, the pace of growth could peak, particularly as investors become less willing to reward companies simply for announcing higher capital expenditure.

In a separate assessment, Goldman Sachs warned that elevated corporate and equity issuance could put pressure on market liquidity and increase funding costs, adding to the risks facing Asian markets.