Asian equities experienced a pronounced sell-off this week after institutional research teams adjusted their outlooks to reflect an intensified energy supply shock. The MSCI All Country Asia Pacific ex Japan fell 2.1%, while foreign investors removed a cumulative $15 billion from positions in emerging Asian markets, according to a recent region-focused briefing from Goldman Sachs titled "Asia-Pacific Weekly Kickstart."
At the center of the market deterioration is a reassessment of the expected duration of reduced oil flows through a critical shipping chokepoint. Goldman Sachs commodities analysts have raised their estimate for the period of constrained exports to 21 days, more than double the prior 10-day assumption. That reassessment has fed through to commodity price expectations, with WisdomTree Brent Crude Oil (LON:BRNT) price targets now set at $110 for March.
Goldman’s regional economics team has incorporated the updated energy outlook into its macro projections. "Our Asian economists have updated their macro forecasts to account for this energy supply shock," the report said, noting that GDP forecasts for most Asian economies were adjusted lower by between 0.3 and 0.5 percentage points. The analysts warned of a material hit to corporate profits: "The bigger risk to earnings is a sustained period of severe oil disruption that weighs on economic growth," they wrote, and highlighted a historical sensitivity that links a 1 percentage point move in real GDP to a 3% to 4% swing in regional earnings.
Market moves were concentrated in oil-sensitive markets. India and the Philippines led declines, each sliding about 5% as investors pulled capital out in response to the heightened energy-risk profile. Across the benchmark MXAPJ index, Goldman has trimmed 2026 earnings estimates by 2% in light of the revised growth outlook.
Monetary policy expectations in the United States were also shifted in the update. "Our US economists have pushed back expectations for two Fed cuts to September and December, from June and September previously," the report said. That pushback in rate-cut timing adds another layer of adjustment for investors who were pricing earlier policy loosening into asset valuations.
Authorities in some Asian economies have taken rapid steps to try to stabilise markets. South Korea and Taiwan announced emergency measures aimed at stemming the outflows and supporting financial stability. The report noted that selling pressure was particularly acute in those two markets, with outflows of $7 billion from Taiwan and $5.4 billion from Korea.
Goldman’s analysts cautioned that a prolonged rise in uncertainty could pose broader threats: "A sustained increase in uncertainty would also threaten equity valuations, corporate confidence, and the nascent rebound in industrial activity." While the regional picture was broadly negative, China bucked the trend with a 0.5% gain. Even so, analysts said "even China’s GDP forecast was trimmed by 0.1pp" as the country is not immune to indirect fallout from the energy shock.
With the trade and investment cycle facing this shock, Goldman indicated that regional equities are likely to remain pressured as institutional investors pivot toward capital preservation. The market is now focused on whether the downgrades tied to the oil disruption reflect a temporary spike in risk or a more extended re-calibration of growth prospects across Asia.
Clear summary: A reassessment of the duration of oil-export disruptions through the Strait of Hormuz prompted Goldman Sachs to cut GDP and earnings forecasts across Asia, coinciding with $15 billion of foreign investor outflows and a 2.1% drop in the MSCI All Country Asia Pacific ex Japan index. Oil-sensitive markets such as India and the Philippines fell sharply, while China posted a modest gain despite a small downgrade to its GDP forecast.