The continuing outperformance of US stocks vs. ASX shares reminds us of the value of considering overseas shares for our portfolios.
As the results below show, geographical diversification can pay off handsomely.
ASX exchange-traded funds (ETFs) have made it easier for Aussie investors to put money into overseas stocks via our local exchange.
If you're considering investing outside the ASX, start your research here.
Top global broker UBS has revealed its 2026 forecast for three key markets outside the ASX: US, China, and Europe.
Here's what UBS had to say, plus some examples of ASX ETFs that track these markets and how they performed in 2025.
Image source: Getty Images
US stocks
The S&P 500 Index (SP: .INX) rose by 16.39% in 2025 and has risen 82.25% over the past five years.
This compares to a 6.8% lift for the S&P/ASX 200 Index (ASX: XJO) last year and a 32.3% increase over five years.
In a recent article, UBS said:
US equities have room to rally further. We expect the S&P 500 to reach 7,300 by June next year and 7,700 by the end of 2026, driven by strong estimated earnings growth of 10% and looser Fed policy.
In addition to the transformative force of AI, we believe the structural trends of electrification and longevity will also drive equity performance for the long term.
Tactically, we believe AI beneficiaries are broadening out both within and beyond tech, and we see opportunities in companies facilitating grid modernization and supply critical raw materials.
In the longevity field, we expect strong growth in the obesity, oncology, and medical device markets.
Example ASX ETF tracking the US stock market: iShares S&P 500 AUD ETF (ASX: IVV)
The IVV ASX seeks to mirror the performance of the S&P 500 after fees, and rose 8.24% in 2025.
China stocks
The SSE Composite Index increased by 18.41% in 2025 and is currently 14.27% higher than where it was five years ago.
SSE stands for Shanghai Stock Exchange. This index is considered the benchmark for mainland China shares.
UBS comments:
China remains Attractive, and we view the correction in tech as an opportunity to add exposure. China's tech shares have fallen sharply over the past two and a half months, with the Hang Seng TECH index down over 19% since its early October high.
But we expect the sector to recover over time, maintaining our preference on the broader Chinese market as well as its tech sector. In fact, we see reasons to buy the dip in Chinese tech stocks, which remain our highest conviction stock idea across global markets.
With Beijing doubling down on self-sufficiency, ramping up chip manufacturing capabilities, and subsidizing data centers, we expect capex from major tech companies to grow 26% in 2026.
In addition, Chinese internet giants have demonstrated their ability to integrate AI into profitable business models, while domestic liquidity remains a key pillar of support for China's equity market.
Chinese tech stock valuations are also attractive, and we expect the sector to deliver earnings growth of over 25% per annum over the next two years.
Example ASX ETF tracking the China stock market: VanEck FTSE China A50 ETF (ASX: CETF).
Rising 10.4% in 2025, CETF tracks the FTSE China A50 Index, representing the 50 largest China equities.
There is no ASX ETF tracking the SSE Composite.
European stocks
The MSCI Europe Index lifted 31.95% in 2025 and has gained 43.61% over the past five years.
MSCI Europe covers approximately 85% of stocks listed across Europe's developed markets.
UBS says:
European equities should benefit from a recovery in growth. Eurozone industrial production in October rose at the fastest pace in five months, and the December flash PMI rounded off the region's best quarterly performance in two and a half years.
We anticipate that positive macroeconomic momentum in the Eurozone will persist, and we expect corporate profit growth to pick up to 7% in 2026 and 18% in 2027.
Germany's increased defense and infrastructure spending should boost investment, while improved banking sector health would support business lending.
Europe is also home to some firms that are driving structural trends … Within the region, we particularly like banks, utilities, industrials, technology, and Germany.
Example ASX ETF tracking the European stock market: Vanguard FTSE Europe Shares ETF (ASX: VEQ).
Up 22.4% in 2025, VEQ ETF tracks the FTSE Developed Europe All Cap Index (net dividends reinvested) in Australian dollars, before fees.
There is no ASX ETF tracking the MSCI Europe Index.
