AAXJ iShares MSCI All Country Asia ex Japan ETF : Bullish and Bearish Analyst Opinions

Asia and Europe exposed to energy shock.

Asian economies vulnerable to Middle East tensions.

Diversify into Europe and Asia.

Stagflation risks pressure Asia and long yields.

Diversify from USD into European and Asian assets.

Prefer European and Asian equities over U.S.

Asia, especially China, most hurt by prolonged Hormuz closure.

The speaker states RBC reduced positioning in Asian equities at the onset of the conflict, believing "Asian economies in general will be affected more by the energy crisis." Asia is a major energy importer. A prolonged war and energy disruption will lead to global demand destruction, which will also negatively impact China and the broader region. Asian equities are more vulnerable to the stagflationary shock of high energy prices and potential demand weakness, making them less attractive than other regions (like the US). The Iran conflict resolves quickly with minimal lasting impact on energy supply and global growth, allowing Asian economies and markets to rebound.

Speaker stated they have "moved to an overweight in Asia ex-Japan" as a risk-management stance amid war uncertainty. The war introduces uncontrollable variables; a strategic overweight in Asia ex-Japan is a calibrated way to maintain risk exposure while managing headline volatility. LONG because it's a deliberate, strategic allocation shift towards the region for weathering the conflict, not a knee-jerk risk-off move. Prolonged war leading to severe global demand destruction, which would impact Asian exporters.

The thesis is to sell/short Asian equities, as Morgan Stanley anticipates a significant downturn driven by the surge in energy prices.

"The real equity markets that are being complacent are really probably in Asia and Europe... Asian and European stock markets have a much more substantial correction ahead of them and probably quite soon." Unlike the US, which is a major energy producer, Europe and Asia are net energy importers. A spike in oil prices (The Second-Order Effect of the conflict) acts as a tax on their economies, crushing margins and growth. SHORT European (VGK) and Asian (AAXJ) indices as they are mispricing the energy shock risk. Energy prices stabilizing or central banks in these regions cutting rates aggressively to support asset prices.

Capital is rotating out of Asian markets due to concerns that rising oil prices will trigger an inflation shock, creating a headwind for regional equities.

Harris argues, "Asia really stands out because almost all of our countries have clear, dedicated government strategies to developing AI infrastructure." Unlike the US, where the "scare trade" dominates, Asian markets are viewed as the "factory" for the AI revolution (infrastructure, chips, energy). They are building the physical layer, making them resilient to the software displacement narrative. LONG Asian equities with a focus on AI infrastructure and government-backed strategic sectors. US tariffs on Asian exports could dampen growth; China's economic recovery remains uneven.

A research firm is positioning Asia as a long-term beneficiary of the disruption caused by artificial intelligence, suggesting a bullish outlook for the region.

When asking who wins on a 15% rate, Clifton answers: "Well, the Asian supply countries." The market had priced in potentially much more aggressive or blanket tariffs. A standardized 15% rate, while a cost, provides certainty and is lower than the extreme tail risks previously feared, allowing Asian exporters to stabilize. Long Asian markets (excluding China specific risks if 301 targets them heavily) as they benefit from the "better than feared" tariff structure. Escalation of Section 301 investigations specifically targeting Asian supply chains later in the year.

While tariffs are global, speakers note that the UK and Australia are losers "at the margin," while winners could be predominantly in Asia (China, Vietnam, Indonesia). Asian currencies are performing strongly. Relative value trade. If the West (US/EU/UK) is bogged down in a trade war, Asian markets—which are seeing positive consumption data (China Lunar New Year)—become a relative safe haven for growth capital, especially with a weaker USD. LONG EMERGING MARKETS (ASIA). Trump targets specific Asian countries with even higher tariffs (e.g., 60% on China).

Asia Pacific equities are down 0.4%, with Hong Kong returning from Lunar New Year to a "not robust" session. Asia is a net energy importer. The combination of rising oil prices ($72+) and a strengthening US Dollar acts as a liquidity drain and margin compressor for Asian economies. SHORT. The macro environment (Strong USD + High Oil) is historically toxic for Emerging Asia. China stimulus announcements could trigger a counter-trend rally.

Asian equities are expected to open higher based on a positive lead from US markets and strong economic data improving overall risk sentiment.