Attracting global capital, a new round of "super cycle" is unfolding in Asia.

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Investors are turning their attention to Asia in search of the next breakthrough for the global stock market rally.

Driven by the wave of artificial intelligence, the Korean stock market has led the world in gains this month, attracting a large influx of capital. Implied volatility in the options market has soared to extreme levels, while derivatives strategists are vying to recommend long positions.

All these signals point to the same judgment: the Asian rally may have only just begun.

According to Chasing Wind Trading Desk, Morgan Stanley's Asia-Pacific team has recently emphasized that the underlying driving force of Asia’s industrial cycle is shifting from traditional real estate and general manufacturing inventory restocking to AI and its infrastructure, energy security and transition, defense, and supply chain resilience investments.

(By 2030, Asia's total fixed investment is projected to rise to $16 trillion)

Morgan Stanley expects Asia's fixed-asset investment to grow from about $11 trillion in 2025 to $16 trillion in 2030, with a nominal annual compound growth rate of about 7% from 2026 to 2030, significantly higher than recent years.

(From 2026 to 2030, Asia’s fixed capital investment will maintain a compound annual growth rate of 7%)

Underlying Logic of the "Supercycle": Significant Acceleration of Capital Expenditures in Asia

The most fundamental difference in this Asian industrial cycle is that AI has pushed capital expenditures back to center stage.

In the past two years, AI discussions have focused more on models, applications, and the U.S. "Magnificent Seven" tech stocks. But from an Asian perspective, the true meaning of AI is: comprehensive expansion of chips, storage, servers, optical modules, data centers, power systems, and cloud infrastructure.

Morgan Stanley mentions that the proportion of global CIOs listing AI as their top priority has risen to 39%. Correspondingly, global AI data center investment is expected to reach about $2.8 trillion between 2026 and 2028, with an annual growth rate of about 33%.

(Global data center capital expenditures in the AI field will further increase)

Asia is at the center of the AI hardware supply chain: From TSMC, Samsung, SK Hynix, to semiconductor, server, optical communication, and cloud infrastructure companies in mainland China, all are set to benefit from this investment cycle.

The report also projects that capital expenditures by major chipmakers are expected to grow from around $105 billion in 2025 to about $250 billion per year by 2028. This means AI is a capital-intensive race.

China’s role is especially noteworthy.

Morgan Stanley believes China's AI is a competition of comprehensive system capabilities: Computing power determines speed, cloud platform determines scale, token usage determines economics, and application scenarios determine value attribution.

With external chip restrictions still present, the synergy of domestic AI chips, local cloud platforms, and large model ecosystems is becoming a new main thread of technology investment in China.

(Comparative advantages of the AI industries of China and the U.S.)

Their assessment shows that China's AI chip market could reach $67 billion by 2030, with the domestic self-sufficiency rate expected to rise to 86%.

Whether this forecast will fully materialize remains to be seen, but the direction is clear: the localization of computing power has gradually shifted from a policy imperative to a commercial imperative.

The Export Story of "Made in China" Is Expanding from "EV Trio" to Robots

In recent years, the brightest spots in China's export structure have been electric vehicles, lithium batteries, and solar panels, the "new trio".

The report suggests that the next stage of new growth for Chinese manufacturing may come from robots, especially industrial and humanoid robots.

Morgan Stanley points out that China has already captured about half of the incremental demand for industrial robots worldwide. In 2025, global humanoid robot shipments are expected to be around 13,000 to 16,000 units, about 90% of which will come from Chinese manufacturers. In contrast, the U.S., Japan, and other markets are still mostly in prototype or early validation stages.

More interestingly, the report compares current Chinese robot exports to EV exports around 2019: at that time, EV exports had not yet entered a boom period, but the supply chain, policy support, and manufacturing capabilities were already in place.

(China’s humanoid and industrial robot industries are at a stage similar to the early stage of the electric vehicle industry)

Now the robotics industry shows similar features—the market size is not large yet, but the pace of supply chain expansion is rapid.

Data show that by March 2026, China's exports of humanoid robots and related products reached about $1.5 billion in 12-month rolling scale, similar to China’s EV exports in early 2020.

In the subsequent years, EV exports expanded rapidly, with full-year 2025 exports reaching about $70 billion and the quarterly annualized run rate further rising to about $86 billion.

Of course, whether robots can replicate the EV export curve will depend on cost reductions, widening use cases, and overseas regulatory environments. But China's advantages in components, system manufacturing, supply chain coordination, and rapid iteration are already being demonstrated.

Energy Security and Defense Spending Are Providing the Second and Third Growth Levers

The flip side of the expansion of AI data centers is the enormous demand for electricity and energy infrastructure. The more intense the computing power, the greater the importance of power, cooling, grid, and energy storage systems.

Morgan Stanley believes energy shocks will catalyze Asia’s investments in energy security, and the share of renewables in Asia's primary energy consumption remains low, indicating considerable room for subsequent investments.

(The proportion of renewables in Asia’s energy mix remains small, and China has greatly benefitted from increased energy transition expenditure)

China has industrial advantages in solar panels, EVs, and lithium batteries, with related exports at a 12-month rolling scale nearing $200 billion, making it a major beneficiary in this round of energy transition capital spending.

At the same time, defense spending is structurally rising in many Asian economies.

Defense expenditure as a share of GDP has increased in Japan, Korea, and India. China and South Korea are also among the world's top ten arms exporters.

(Across the region, the ratio of defense spending to GDP is on the rise)

For capital markets, this means longer-term support for demand in high-end manufacturing, materials, electronic components, precision equipment, and other industrial chains.

In other words, AI brings demand for computing power, energy provides infrastructure constraints, and defense and supply chain security offer "resilience investment" under geopolitics. Together, they form the foundation of Asia's supercycle.

Who Benefits Most? China, South Korea, and Japan Are at the Industrial Core

In terms of beneficiaries, Morgan Stanley highlights China, South Korea, and Japan.

Mainland China's strengths lie in the completeness of its supply chain, manufacturing scale, engineering capabilities, and new export categories like new energy and robotics.

South Korea excels in memory, HBM, batteries, and segments of equipment and materials; Japan still has deep expertise in semiconductor equipment, materials, precision manufacturing, and industrial automation.

The share of capital goods in exports also illustrates the point. The report shows: Thailand about 38%, China about 36%, Japan about 35%, and South Korea about 30%. This means that, as the world enters a new cycle of equipment investment, these economies will see more prominent elasticity on the demand side.

Finally, from a capital market structure perspective, sectors related to industry, tech hardware, and materials have higher weight in these markets, so macro capital expenditure cycles are more readily reflected in stock market performance.

This also suggests that in coming years, the pricing logic of Asian markets may change, with particular attention to which companies in the capex chain have orders, technical barriers, and profit elasticity.

Risks Not to Be Ignored: Oversupply, Profit Margins, and Geopolitical Frictions

The supercycle narrative is attractive, but this does not mean all sectors and companies will benefit simultaneously.

First, capex expansion may bring periodic supply pressure.

China's new energy industries have proved that scale advantage can quickly access global markets, but may also be accompanied by price competition and margin volatility. Future challenges could arise in robotics, AI hardware, photovoltaics, storage, etc.

Second, technological restrictions and export controls remain variables.

There is substantial headroom for domestic AI chips, but there are still bottlenecks in advanced processes, HBM, EDA, and equipment materials. The report also notes that domestic chips still lag behind U.S. top chips, but their competitiveness can be enhanced through system optimization, advanced packaging, and software adaptation.

Third, employment structures will also be affected by AI.

In its "Future of Work" studies, Morgan Stanley expects about 90% of professions to be affected to varying degrees by AI automation and augmentation. Among sample companies, early adoption of AI has led to productivity improvements of over 11%, but also an average net job reduction of about 4%, with notable differences between countries and industries.

For China, how to promote retraining and job transitions while raising efficiency will be a key medium- to long-term issue for policy and business management.

Fourth, market volatility may increase. The report also notes that as bull-bear scenarios diverge further in regional markets, there will be lasting differences in investors’ expectations on AI capex, export orders, and profit realization.

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The above content is from Chasing Wind Trading Desk.

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