Asia-Pacific investors brace for market correction in 2026 amid tech bubble fears: survey
News Summary
A majority of Asia-Pacific institutional investors believe markets are due for a correction in 2026, citing a potential tech bubble, geopolitical tensions, and recession as primary worries, according to a survey report released Tuesday by Natixis Investment Managers. Despite challenges like tariffs, geopolitical conflicts, and supply chain disruptions, global markets showed “remarkable resilience” in 2025. However, 74% of institutional investors globally, including 80% in the Asia-Pacific region, felt a correction was “overdue”. Among Asia-Pacific investors, 48% identified a potential tech bubble as their top concern, followed by geopolitical shocks (45%) and recession (40%). For global investors, geopolitical shocks were the primary concern (49%). The report also noted that 60% of investors in the region plan to increase allocations to domestic equities to diversify away from the US. Dora Seow, CEO of Natixis Investment Managers Singapore, stated that international and non-US equities have re-entered focus in 2025 after a prolonged period of US market outperformance.
Background
As of late 2025, the global economy has demonstrated some resilience amidst various challenges. However, the trade policies of the Donald J. Trump administration, including potential tariffs, and ongoing global geopolitical tensions, particularly with major economies like China, continue to inject uncertainty into global markets. The technology sector has shown sustained robust growth throughout 2025, yet this has simultaneously fueled concerns about overvaluation and a potential bubble, especially within emerging tech areas like artificial intelligence. Concurrently, central banks worldwide are navigating a delicate balance between containing inflation and supporting economic growth, making the trajectory of monetary policy a key market focus.
In-Depth AI Insights
Does Asia-Pacific investors' concern about a 2026 market correction signal a structural shift in global capital flows? - Yes, this survey reflects investor caution regarding persistent high valuations in the US market, particularly in the tech sector. The 60% of Asia-Pacific investors planning to increase allocations to their home region's equities, diversifying away from the US, indicates a decentralizing trend. - This diversification strategy is likely linked to trade and investment uncertainties stemming from the Trump administration's "America First" policies. Investors are seeking to build more resilient portfolios within their regions to mitigate potential external shocks and policy risks. - In the long term, this could lead to more active intra-Asian capital markets and new growth drivers for regional assets, but it might also render global capital flows more fragmented and complex. Is the fear of a tech bubble merely short-term sentiment, or does it reflect deeper structural economic issues? - The tech bubble concern is not merely short-term sentiment; it reflects structural risks where valuations of certain tech companies have decoupled from fundamentals in an environment of low interest rates and abundant liquidity. - The "remarkable resilience" of global markets, particularly tech stocks, in 2025 despite challenges, may have been liquidity-driven rather than purely profit-supported. This valuation fragility will be exposed once monetary policy tightens or earnings growth slows. - This concern is closely tied to the global disinflationary process, central bank rate hike cycles, and the potential "hype cycle" surrounding emerging technologies like AI. Investors are assessing the gap between the actual monetization capabilities of technological advancements and the high valuations ascribed by the market. How do geopolitical tensions, as the top concern for global investors, influence asset allocation strategies? - Geopolitical tensions, particularly in the context of the Trump administration, including US-China relations, trade conflicts, and regional flashpoints, have become the paramount uncertainty for global investors. - This concern drives investors towards defensive assets and is likely to lead to further regionalization of supply chains and "friend-shoring." Investors will prioritize political stability and policy predictability. - Asset allocation strategies will increasingly favor hedging geopolitical risks, such as increasing allocations to gold, sovereign bonds, or investing in specific regions or industries with better hedges against geopolitical exposure, rather than solely pursuing growth. This also explains the impetus for Asia-Pacific investors to diversify into regional markets.