US rally roars on, but is Asia where the next wave builds?

The US stock market continues to surge, its strength underpinned by robust earnings and an easing policy stance from the Federal Reserve. AI remains the defining force, lifting productivity expectations and propelling capital spending.

Wall Street is still the engine of global growth, but attention is beginning to turn elsewhere. A growing number of market participants see the next major wave forming in Asia, led by China and Japan.

The US bull run has substance. Corporate America is still expanding margins, and analysts expect further double-digit earnings growth in 2025. Companies are deploying record levels of cash into AI infrastructure, automation and efficiency improvements.

For now, the combination of falling interest rates and resilient profits keeps the upward momentum alive. Yet a striking concentration has taken hold: a small cluster of tech giants now accounts for an outsized share of total market performance.

This imbalance may not matter day to day, but it limits diversification. In this environment, many global investors are exploring how other regions could complement, rather than compete with, US exposure.

China’s equity recovery this year has been one of the most significant global market stories.

The MSCI China Index has climbed more than 35% year to date, one of its best performances in over a decade. This is not a speculative rebound. It reflects deliberate policy choices and a shift in the country’s economic engine. Beijing has placed advanced technology, manufacturing and self-reliance at the heart of its 2026–2030 development plan.

The country’s investment narrative has evolved: from property and infrastructure toward innovation and productivity.

Liquidity conditions have improved, and domestic participation in the equity market has deepened. Retail and institutional investors inside China are now more active than at any point since the mid-2010s. That internal demand provides stability that foreign capital alone cannot. At the same time, valuations remain far below their peaks. Chinese equities continue to trade at a steep discount to US benchmarks despite solid earnings prospects.

The result is a market regaining credibility, with structural growth potential rather than cyclical noise at its core.

Japan’s trajectoru is just as compelling. The Nikkei 225 has gained more than 25% this year, reaching record highs as global capital returns to Tokyo. The story behind this surge is one of reform and modernisation.

Japan’s new prime minister, Sanae Takaichi, has revived the spirit of Abenomics with a focus on pro-growth policies, industrial renewal and national competitiveness. Corporate governance changes are forcing companies to address balance-sheet inefficiencies, reward shareholders and pursue higher returns.

For decades, Japan was seen as a market with value trapped in its corporate structures. That is changing. Share buybacks and dividend hikes are accelerating, boards are opening up to activist pressure, and foreign ownership is climbing.

The result is a long-term rerating built on real structural shifts rather than currency weakness alone. Japanese companies exposed to infrastructure, technology supply chains and defence are benefiting most from this transformation, and the momentum looks set to persist as reforms continue.

The appeal of Asia is not simply about chasing performance, it’s about understanding where new cycles are forming.

Both China and Japan are operating under clear strategic frameworks designed to strengthen their domestic growth bases.

In contrast, the US story, though still powerful, is increasingly reliant on a narrow group of companies and the continuation of easy financial conditions.

The broader backdrop also favours a wider global view. With US rates moving lower and inflation pressures easing, the dollar has lost some of its edge.

History teaches us that periods of softer US currency have coincided with stronger relative performance across Asian and emerging markets. Capital often follows opportunity where monetary conditions and earnings growth intersect.

This does not imply an end to the US rally — far from it. The fundamentals behind it remain solid. But a truly global perspective now requires an appreciation of where policy, valuation and innovation are converging beyond American shores.

The world’s next phase of equity leadership may be taking shape not in Silicon Valley or New York, but in Shanghai and Tokyo.

The shift is subtle, but it matters.

As markets broaden and economic power continues to rebalance, the smartest conversations in finance are no longer about which US tech giant will dominate next quarter’s earnings season, but which regions are quietly preparing to lead the next decade.