Thoughts on the Market – "How Asia Is Reinventing Itself for Global Competition"

Morgan Stanley | October 6, 2025
Hosts: Daniel Blake (Asia Equity & Thematic Strategist) & Tim Chen (Head of Asia Sustainability Research & Thematic Strategies)

Episode Overview

This episode focuses on the dynamic transformation underway in Asia as the region reshapes its development strategies, corporate governance, capital markets, and industrial priorities. The hosts explore themes such as deglobalization, energy transition, AI investment, demographic shifts, and the unprecedented competition emerging from the multipolar global order. The conversation emphasizes why these changes matter for investors worldwide and illustrates actionable themes for those seeking opportunities in Asia’s evolving landscape.

Key Discussion Points & Insights

1. Asia's Competitive Reinvention

Timestamp: [00:25–01:08]

• Drivers of Change:
  • Rapid shifts in supply chains and deglobalization.
  • Large-scale investment in AI technologies.
  • Accelerating energy transformation and responses to an aging population through healthcare and nutrition innovation.
• Cultural & Historical Roots:
  • Deeply embedded patterns of competition influenced by export-driven modernization (Japan, Asian Tigers).
  • Heightened competition to capture market share in emerging tech—especially amid intensifying US-China dynamics.
• Investment Implication:
  • The region’s reinvention is both a challenge and opportunity, deserving focused attention from global investors.

Quote (Daniel Blake, 00:28):
"Asia's transformation is a story every global investor needs to follow and look for opportunities in."

2. Corporate Governance & Capital Market Reforms

Timestamp: [01:08–02:08]

• Governance Reforms:
  • Markets like Japan, China, Korea, India, and Singapore are leading governance improvements, covering 70% of MSCI Asia Pacific Index market cap.
  • Strong correlation between board independence and equity returns, particularly in Japan.
  • Companies with superior or improving governance metrics show significant alpha potential.
• Investor Perspective:
  • These shifts are enhancing the financial supply chain, improving capital raising and allocation, and ultimately delivering better returns for Asia’s aging populations.

Quote (Tim Chen, 02:08):
"There is a significant alpha potential from companies with leading governance metrics and also companies that may improve their governance metrics over time."

3. Navigating a Multipolar Asia

Timestamp: [03:19–04:42]

• Weaponized Interdependence:
  • The multipolar world is back at the forefront due to trade tensions, economic security frameworks, and strategic dealmaking.
  • Recent policies:
    • China’s export controls
    • Japan's Economic Security Promotion Act
    • India's Self Reliant India Framework
    • Korea’s Supply Chain Stabilization Act
    • Australia’s National Reconstruction Fund
• Sector Impact:
  • Emphasis on critical minerals, permanent magnet supply chains, semiconductor localization, and rising regional defence investment ($600B in 2024 projected to $1T in 2030).
• Investment Lens:
  • Opportunities in sectors aligned with economic security and supply chain resilience.

Quote (Daniel Blake, 03:34):
"We've seen the concept of weaponized interdependence really being proven out in the second quarter of 2025."

4. The Future of Energy in Asia

Timestamp: [04:42–06:50]

• Energy Security:
  • Southeast Asia importing US gas; Korea and Japan exporting nuclear technology.
  • Balancing multipolar world realities with national energy targets.
• Growth Engines:
  • Explosive CAPEX into renewables in India.
  • China as the largest solar market globally.
  • Korea and Japan expanding nuclear capacity and aiming to export to Western countries.
• Two Key Investment Theses:
  1. Nuclear Renaissance: Japan and Korea poised to benefit.
  2. Gas Globalization: Infrastructure and security crucial for ASEAN region.
• Outcome:
  • Energy developments underpin key transition and investment opportunities across regional markets.

Quote (Tim Chen, 04:49):
"The energy story is really at the core of Asia multipolar world positioning."

5. Technology, AI, and Digital Transformation

Timestamp: [06:50–08:09]

• AI & Tech Competition:
  • China aims to strengthen its role in technology development, leveraging power, data, and talent, while facing compute constraints and pursuing localization.
  • Companies in India benefit from the “India Stack” as a foundational digital enabler.
  • Asia-wide search for ‘AI adoption leaders’ among corporates.
• Competitive Edge:
  • Broader supply chain incentives and diversification strategies for emerging MNCs.

Quote (Daniel Blake, 06:50):
"The concept of competitive reinvention also is useful in understanding Asia's response to AI and technology diffusion."

6. Longevity and the Silver Economy

Timestamp: [08:09–09:27]

• Demographic Shift:
  • China by 2030 will have 260 million elderly (18% of the population); Korea and Japan well into the “super-aged society” bracket.
• Reform Focus:
  • Health care, pension, labour, and financial reforms to support aging societies.
  • Japan’s focus on healthy longevity—investment in affordable healthy food and consumer health.
• Opportunities:
  • Healthcare, pharmaceuticals, healthy food sectors, and revamped financial/pension systems all represent emerging investable themes.

Quote (Tim Chen, 08:31):
"Longevity economy and the silver economy is becoming a big theme for Asia Pacific for a long time to come."

Memorable Moments

• Multipolar World Urgency:
  Defense spending jump from $600B to $1T in just five years ([04:30]).
• Nuclear Export Shift:
  Korea and Japan’s ambitions to export nuclear tech ([05:00]).
• Healthy Aging Focus in Japan:
  Reports on the intersection of longevity and affordable health food ([08:22]).

Conclusion

The episode unpacks Asia’s ongoing reinvention, emphasizing governance upgrades, capital market modernization, resilience in a multi-centric world, energy transition, technological innovation, and responses to demographic change. Themes like competitive reinvention, governance as a return driver, energy security, and the emergence of the longevity economy are presented as actionable, data-driven opportunities for investors.

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