Morningstar published its Asia Equity Outlook for the fourth quarter of 2026 on 3 November. The report notes that the technology pullback in the third quarter created new opportunities in Asian equities, with China and Hong Kong remaining among the most undervalued markets in the region.
The document states that approximately 77 per cent of Morningstar's China and Hong Kong coverage carries 4- or 5-star ratings. These ratings are driven by banks, internet, consumer and healthcare names.
The third-quarter technology pullback has created attractive opportunities in Asian equities.
The outlook identifies rising interest rates as a near-term risk for equities while expectations for US rate cuts have shifted to the second half of 2027.
For Asia-Pacific asset owners this means the updated valuation estimates can be used to test current equity weights and sector exposures in mandates against intrinsic value, supporting more selective approaches aimed at improving risk-adjusted returns within existing portfolios.