In a shift of investor preference, India has dropped to the fourth spot among Asia’s most preferred equity markets, according to BofA Securities’ Asia Fund Manager Survey. Japan continues to dominate, followed by Taiwan and South Korea, which are riding the upswing in the global semiconductor cycle.
Korea’s appeal has been further boosted by optimism around policy reforms under its new leadership. Meanwhile, China’s market remains among the least favored, ranking just above Australia and Thailand.
Key India sector insights:
- Investors are showing strong interest in consumption and infrastructure themes.
- IT services have fallen out of favour, correlating with a 20-month low in BofA’s India IT services indicator.
- Small- and mid-cap stocks are drawing notable attention from investors.
Across the broader Asia ex-Japan portfolio, fund managers are heavily tilted toward growth sectors like semiconductors, software, tech hardware, and banks, while avoiding materials, energy, industrials, and real estate. In Japan, banks remain the top pick due to rising interest rates, followed by semiconductors.
The survey also suggests investors are leaning towards value stocks, though no clear preference for any specific market-cap segment has emerged. In China, AI and semiconductor themes continue to attract interest.
Despite geopolitical tensions, especially around US-China trade, sentiment is improving. A net 31% now expect a weaker global economy, a major rebound from April’s 82%. Similarly, only 26% foresee a weaker Asian economy, showing rising investor confidence.