Goldman Sachs has reduced its 12-month price target for the MSCI Asia Pacific ex-Japan (MXAPJ) index to 870 from 900, attributing the adjustment to a combination of upward pressure on energy prices and downward revisions to regional economic growth. The bank now estimates a 17% upside from current index levels after noting the index had corrected 12%.
The investment bank cut its 2026 earnings growth forecast for the MXAPJ index by 1 percentage point to 29%. That projection sits 3 percentage points lower than the estimate in place at the start of the Middle East conflict. Separately, Goldman Sachs reports regional earnings growth of 8% when excluding Korea and Taiwan, and indicates that the most significant earnings downgrades have been concentrated in India and ASEAN markets rather than in north Asia.
Commodity analysts at the firm raised their oil and gas price forecasts, pointing to a prolonged impairment of Strait of Hormuz flows along with strategic stockpiling as the primary drivers of higher energy assumptions. On the macro side, Goldman Sachs economists trimmed their regional GDP growth outlook by 10 basis points to 4.6% and lifted inflation forecasts by 30 basis points to 1.9%.
Policy and rating changes were notable at both the country and sector levels. India was downgraded from overweight to market weight, with Goldman Sachs citing intensifying macro headwinds, sizeable cuts to earnings growth, and an elevated valuation as the rationale. The Philippines was also downgraded to underweight for similar macro concerns. By contrast, the bank maintained overweight ratings on China, Japan and Korea.
On sector positioning, Goldman Sachs moved to overweight or market weight allocations for energy, banks and telecommunications. Conversely, autos and staples were downgraded to underweight, while retail was set to market weight. The firm recommended that investors focus on themes tied to energy security, defense, U.S. reindustrialization and the semiconductor memory supercycle.
The combination of higher energy price assumptions, modest cuts to GDP and higher inflation expectations, and targeted downgrades for markets such as India and the Philippines underpin Goldman Sachs' revised regional stance. The bank's updated view reflects both macro adjustments and sector-level rebalancing rather than uniform pessimism across Asia Pacific ex-Japan.
Key data points reiterated by Goldman Sachs:
- MSCI Asia Pacific ex-Japan 12-month price target cut to 870 from 900.
- Projected 17% upside from current levels following a 12% index correction.
- 2026 earnings growth forecast for MXAPJ lowered to 29%, down 1 percentage point; 3 percentage points lower since the Middle East conflict began.
- Regional GDP forecast trimmed by 10 basis points to 4.6%; inflation raised by 30 basis points to 1.9%.