The investment firm’s Outlook 2026: Navigate New Pathways report has highlighted India’s exceptionally favourable demographics are being matched by rapid advances in its digital infrastructure.
“The country accounted for 46 per cent of global real-time digital payments in 2023 – and it is the world’s largest supplier of vaccines and generics, with the US accounting for approximately a third of its pharmaceutical exports.”
“It is also perfectly situated to continue to benefit from ‘China + 1’ strategies as global companies seek to diversify their supply chains and manufacturing bases.”
Allianz Global noted that India’s equity market is broad, liquid and increasingly comparable to those of more advanced economies.
“With over 200 stocks exceeding market caps of US$5 billion, valuations are also low compared to global benchmarks. Consensus estimates for GDP and earnings-per-share growth place India ahead of other emerging markets, reflecting its strong fundamentals, policy stability and vibrant entrepreneurial scene.
“Despite some potential bumps in the road due to ongoing tensions with the US, we thus expect India to remain an attractive destination for active management for some time to come. Recent setbacks due to US tariffs are also contributing to attractive entry points.”
The firm also sees China’s equity market as deep, attractively valued and significantly under-owned by foreign investors, offering contrarian opportunities for patient capital.
“The country’s innovation power, particularly in the AI field, remains underappreciated, while the potential for large pension reforms and significant strategic alliances away from the US also contribute to the country’s current appeal to investors.
“While performance has been volatile – and further news-driven volatility is to be expected – local Chinese equities have performed well in 2025, and the long-term trajectory remains positive, especially for investors focused on innovation, domestic consumption and strategic sectors.”
According to Allianz Global Investors, China’s equity outlook is being shaped by a complex mix of tailwinds and headwinds.
“On the one hand, we are seeing foreign capital outflows as the future trade relationship with the US remains unclear, alongside some regulatory uncertainty in tech and property, as well as demographic pressures from a rapidly ageing population.
“However, the Chinese government is responding to these challenges with targeted stimulus, including rate cuts, government-backed purchases of exchange-traded funds (ETFs), and supportive liquidity measures. With these initiatives, we will hopefully see a return of consumer confidence, unlocking high household savings and greater stability in the economy.”
The outlook also pointed to diverging inflation dynamics – rising in the US yet subdued in most other regions – with contrasting monetary responses reinforcing the need for regional diversification, particularly for investors seeking resilient income in more volatile conditions.
“The US – long a crucial engine of global growth – faces institutional challenges and potentially stretched asset valuations. While AI-related stocks remain an essential part of portfolios, investors should be selective to mitigate the risks of any fallout.”
“To prepare for any potential swings in stock prices, we will continue to take a robust approach to stock selection and overall AI exposure – built on the combined strength of our fundamental and quantitative analysis.”
Chief economist Christian Schulz added that even with the lingering disruptions of trade wars, global growth should prove resilient in 2026, aided by AI and proactive policy support.
“But the year ahead will test institutional resilience, policy flexibility, and the global economy’s ability to adapt to a more fragmented world,” he said.
Diverging inflation trends and differing monetary strategies have reinforced the value of regional balance, according to Allianz, particularly for investors seeking stable income in what is likely to remain a volatile environment.
