KUALA LUMPUR (Dec 23): Asian investors should focus back on the domestic economy, and countries such as Malaysia, India, Indonesia, and Thailand have favourable demographics to support domestic consumption, said British asset management firm Schroders.

Singapore real estate investment trusts are “appealing” for both income- and growth-focused investors, Schroders said in its 2025 multi-asset and income outlook. Taiwanese and Korean banks offer attractive dividend yields while benefiting from strong trade with major economies, it noted.

“A robust demand from local consumers reduces dependence on international markets and mitigates the impact of potential US tariffs on imports,” said Schroders, which manages assets worth over £774 billion (RM4.4 billion).

US president-elect Donald Trump has promised far more prohibitive trade policies than those implemented during his previous term even before taking office. In particular, he has threatened tariffs targeted at several countries including China, Malaysia’s biggest trading partner.

The prospects of another round of US trade war with China and its other trading partners have rattled policymakers and markets worldwide.

“Asia is also more than a China story and other key markets within the region, including India, Indonesia and Thailand, provide attractive growth stories and positive diversification,” Schroders said.

Apart from focusing on the domestic economy, Schroders also recommended looking at “world class leaders in the digital age” that can provide resilient earnings growth.

The Taiwanese semiconductor industry, for instance, is a key beneficiary of the rise of applications driven by artificial intelligence, and continuous investment in research and development allows their firms to maintain a competitive edge, Schroders flagged.

The fund manager also highlighted Asia’s industrial sectors, including electric vehicle battery manufacturers and machinery companies that export globally, are critical drivers of technological advancement and economic growth.

Further, Asian markets are beneficiaries of rate cuts, which can boost consumer spending on non-essential goods and services, Schroders said.

Utilities are also expected to benefit from rate cuts as lower borrowing costs help reduce operational costs and improve profit margins while technology firms that often invest heavily in research and capital projects will benefit from reduced cost of financing, the fund manager added.