The Indian equity market is ranked the second-last in the Asia-Pacific region, according to Bank of America’s latest fund manager survey (FMS), which also revealed that allocation in Indian equities has fallen to a two-year low, while that of China has rebounded.
The survey revealed that 19% of the total 205 panellists managing $482 billion in assets are underweight on Indian equities from a 12-month perspective, as against 10% in January.
In terms of allocation, Japan came out on top, yet again, as the economic and market outlook for the region hit record highs, with Taiwan standing a distant second, the survey stated. “Allocations to China rebounded (to a two-year high) aſter falling sharply last month, while the support for Indian equities, an erstwhile market favourite, continues to dwindle with allocations collapsing to a two-year low.”
Sector wise, allocation in telecom saw a surge, with technology continuing to dominate regional sector allocations, while real estate and materials lag, the survey said, listing its favourite themes. In China, the brokerage likes AI/semiconductors, internet, and dividends/buybacks. For India, it has listed infrastructure and consumption. In Japan, BofA likes banks, followed by industrials.
The survey has noted that EuroStoxx, Nasdaq, and Hang Seng will be the best performing indices this year, with return expectations of 20%, 18%, and 18%, respectively. This shows the peak in investor conviction of the US exceptionalism, the survey said.
Global recession expectations have fallen to a three-year low, back to the February 2022, pre-Ukraine/NATO/Russia war level, with 16% of FMS investors saying the global economy is likely to experience a recession in the next 12 months. At the same time, they expect the rate cut to endure, with 51% expecting two or more such actions.
The global survey also noted that the February improvement in China growth prospects is the first outside of any policy stimulus announcement in the past three years, suggesting a DeepSeek effect on the China sentiment.
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