Goldman Sachs strategist Tim Moe argues that North Asian markets are outpacing their southern counterparts because they combine stronger fiscal buffers with deeper AI integration. The region’s tech‑heavy indices in Taiwan, South Korea and Japan have benefited from AI‑driven rallies, while southern economies remain exposed to energy price volatility.

The outperformance is most evident in South Korea and Taiwan, where tech stocks account for the majority of market weight and have posted gains exceeding 80% year‑to‑date. Valuations in Korean semiconductor names such as Samsung Electronics and SK Hynix are stretched, trading at five to six times this year’s earnings, suggesting skepticism about the sustainability of current profit levels. Japan is also viewed positively, supported by political stability under Prime Minister Sanae Takaichi, solid earnings growth and advances in AI robotics.

In China, Moe notes that A‑shares, denominated in yuan and up around 10% year‑to‑date, are outperforming H‑shares, which are weighed down by weaker earnings in internet‑focused firms. Policy support for China’s equity market and the recent turnaround in producer price inflation have bolstered confidence, but the country still faces a looming energy supply shock that could trigger a market correction later in the year.

Moe cautions that while the current divergence offers opportunities, investors should remain vigilant for a potential “rude awakening” when energy price pressures intensify, especially in markets with limited fiscal room to absorb higher costs.