Asia is headed towards an industrial supercycle

1. 1. Asia is entering a significant industrial supercycle, fueled by a sustained increase in capital expenditure, not merely a tech export rebound.
2. 2. The supercycle is powered by investment in AI-related infrastructure, renewable energy transition, broader energy security, and defence spending.
3. 3. Capital expenditure in these key sectors is projected to grow at a 16% compound annual rate over five years, boosting Asia's overall capex growth to 7%.
4. 4. Current data, including capital goods imports and Asia's PMI, show industrial indicators at multiyear highs, surpassing 2017-18 peaks.
5. 5. China leads in green power spending, while India, Japan, Korea, and Taiwan are significantly increasing defence budgets amidst geopolitical tensions.
6. 6. The rise in capex will catalyze a broader industrial cycle across entire supply chains and enhance consumption growth through job creation and wage increases.
7. 7. China, Japan, Korea, and Taiwan are major beneficiaries due to their industrial share and export focus on AI-enabling, defence, and capital goods.