Investing.com-- Investors navigating Asian equities should brace for heightened volatility driven by trade policy uncertainty and artificial intelligence (AI) advancements, Goldman Sachs (NYSE:GS) analysts said in a note.
Goldman Sachs cautioned that a 10% universal tariff by the U.S. could lead to a 3% hit to regional earnings and a 4% decline in valuations, with Taiwan, Korea, and Japan most exposed.
Goldman Sachs maintained a positive stance on Chinese equities but flagged expectations of profit-taking after a 30% rally since mid-January.
Analysts warned of an upcoming risk window in early April—when reciprocal tariffs and other trade measures may be announced— saying it could influence market sentiment.
Goldman Sachs reiterated an "overweight" stance on Japan, citing a strong investment case despite the yen’s fluctuations.
In contrast, it held its "marketweight" views on India, Korea, and Taiwan, with investors watching the impact of tariffs and macroeconomic shifts.
The firm downgraded Indonesia to marketweight, while upgrading Singapore to overweight, citing relative economic stability.
AI remains a central investment theme, with a shift toward applications benefiting China, according to Goldman Sachs.
"DeepSeek’s low cost, high performing R1 large language model has prompted a shift in the AI theme from the infrastructure layer to the application layer and galvanized a recovery in China equities," analysts wrote.
Analysts highlighted Taiwan, China offshore, and Korea as key beneficiaries of AI-related revenue growth.
Meanwhile, the broader market impact of AI is expected to support sectors like robotics, autonomous driving, and power infrastructure, analysts added.