With AI stocks creating significant concentration risks in Asian markets, HSBC has identified 10 ‘forgotten gems’ for investors seeking diversified growth opportunities. These non-AI companies exhibit strong financials, including high return on equity, market share gains, profitability, and attractive dividends. Featured picks include Hong Kong Exchange, China’s Fuyao Glass Industry, WuXi AppTec, and India’s Godrej Properties, representing various sectors poised for sustained performance beyond the AI boom.
Since the launch of ChatGPT in late 2022, Artificial Intelligence (AI) has undeniably dominated global financial markets. This fervent investor interest has propelled AI-related stocks, including giants like Nvidia, Intel, Samsung, TSMC, and SK Hynix, to unprecedented valuations. However, this intense focus has also generated significant concentration risk, particularly within Asia, where HSBC highlights that more than half of the FTSE Asia ex-Japan index returns have been driven by just three companies: TSMC, SK Hynix, and Samsung Electronics.
Warning against the inherent risks of such a concentrated rally, HSBC noted, “There are risks to such a concentrated rally. Everybody owns the same stocks,” and suggested that this narrow focus on AI is causing “market dislocations and, in some cases, is pulling attention away from other growth themes.” In response, the bank has unveiled a curated list of 10 “forgotten gems” across Asia, encouraging investors to look beyond the AI phenomenon. These selected companies are characterized by their consistent high return on equity, a proven ability to gain market share, robust profitability, and attractive dividend distributions.
Among HSBC’s diverse picks are the Hong Kong Exchange, South Korean food manufacturer Samyang Foods, and Indonesian telecommunications provider PT Telkom. China's Fuyao Glass Industry, the world's largest automotive glass producer, also made the list, praised by HSBC analysts for its significant scale. The bank believes the market is currently undervaluing Fuyao’s growth potential and its resilient profit margins, especially as shifting global competitive dynamics increasingly favor the company. Fuyao commands approximately 70% of the Chinese market and is steadily expanding its international footprint, supported by manufacturing facilities in the US and a broad product portfolio anchored in China.
Another notable inclusion is WuXi AppTec, a China-based contract research, development, and manufacturing organization (CRDMO). HSBC analysts project an 11% growth in its CDMO (drug development and manufacturing) revenue in 2025, with further acceleration anticipated in 2026, driven by strong customer demand and ongoing global capacity expansions in Singapore, the European Union, and the US. WuXi AppTec itself forecasts an 18%–22% revenue growth for its continuing operations in 2026, with analysts expecting this growth trajectory to continue for another two to three years.
The list also features Indian real estate developer Godrej Properties. Despite a broader moderation in market appetite that has pressured Indian developers’ stocks, HSBC points out that premium housing demand remains robust. Godrej Properties stands out as one of the few real estate firms in India with a nationwide presence, a strong balance sheet, a reputable brand, and extensive experience in sourcing and executing large-scale projects. HSBC asserts that these attributes position the company well for significant market share expansion, anticipating that strong deliveries will translate into enhanced reported profitability, improved collections, and robust cash flows.
