India regains favour, China slips to underweight allocation: BofA survey

BofA's Asia Fund Manager Survey shows India regaining a mild overweight as a diversification play against AI-led markets, while China slips to underweight on stalled momentum

India is serving as a diversification play against artificial intelligence (AI)-driven markets. It has slowly climbed back to a mild overweight position, according to the Asia Fund Manager Survey.

 

Why does the BofA survey say India is regaining favour? 

India is serving as a diversification play against AI-driven markets, the survey said, adding that it has slowly climbed back to a mild overweight position.

 

Why does Japan remain the top Asia-Pacific preference in the survey? 

However, Japan remains the favourite in the Asia Pacific region, topping preference rankings since its inclusion in October 2023.

 

What does the survey say about Prime Minister Sanae Takaichi’s policy impact? 

The survey said views on Prime Minister Sanae Takaichi’s policy impact remain positive, with short-term pullbacks in equity markets largely seen as healthy consolidation for the continuation of the rally.

 

Why has China slipped to underweight in the BofA survey? 

Regarding China, the survey said growth momentum has stalled following six months of improving sentiment since Trump’s Liberation Day shocker. Though the long-term structural view is no longer grim, valuations are no longer supportive, and investors are likely to await concrete signs of stimulative policy before adding exposure, the survey said.

 

“Household risk appetite is waning, with a shift toward saving rather than investing. Consequently, allocations have slipped to underweight,” BofA said in a note.

 

Which other markets are fund managers positive on, despite volatility? 

The survey further said fund managers remain positive on Taiwan and Korea.

 

“Despite recent volatility, AI, internet, anti-innovation, and Korea’s corporate value-up programme continue to dominate positioning,” the brokerage noted.