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India, China stock markets: What BofA's fund manager survey reveals

India, China stock markets: What BofA's fund manager survey reveals

Japan with net 56 per cent of investors 'overweight' sits atop the country preference list, followed by India and Taiwan (19 per cent each), China's allocation (net 23 per cent underweight) struck a new low.

Amit Mudgill
Amit Mudgill
  • Updated Feb 15, 2024 11:02 AM IST
India, China stock markets: What BofA's fund manager survey revealsChina stock market, in particular, failed to obtain the nod of approval from survey participants, with the majority willing to sit out/avoid at the moment, including 15 per cent who are looking to cut risk on any bounces.

BofA's latest fund manager survey on Asia suggests India has been among preferred investment destinations after Japan, as funds prefer avoiding heavyweight China due to fears of structural de-rating. As per the survey, Japan with net 56 per cent of investors 'overweight' sits atop the country preference list, followed by India and Taiwan (19 per cent each), China's allocation (net 23 per cent underweight) struck a new low.

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A total of 249 panellists with $656 billion in asset under management (AUM) participated in the BofA's survey. A total of 209 participants with $568 billion assets responded to the global FMS questions and 145 participants with $331 billion AUM responded to the regional FMS questions. The survey was conducted between February 2 and February 8.

The Global Fund Manager Survey (FMS) view of the global economy has risen to a 2-year high after a protracted period of gloom, echoing the optimism of our proprietary growth indicators.

"The outlook for the regional economy moved up in tandem, with net 29 per cent expecting a stronger APAC ex-Japan economy (highest since August), and net 54 per cent a stronger Japan economy in the next 12 months.  The lone exception: China, bucking the trend with more participants in favour of a weakening rather than a strengthening in the year ahead for the first time since the launch of this periodical 17 months ago," BofA survey suggested.

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In an apparent disconnect, said BofA, the return expectations for Asia have mellowed down a notch, likely due to the underwhelming year-to-date performance of index heavyweight China.  The moderation in expectations was driven by a dip in both the profits outlook and the undervaluation perception of the regional equity markets, it noted.

To recall, following the MSCI's February's rejig, India's weightage in the index has hit an all-time high of 18.2 per cent. This is against China, whose weight in the index will fall to 25.4 per cent after the February revision from 26.6 per cent a year ago.

Japan remained the favourite market in the region, as cited by net 56 per cent of investors, with a tilt towards semis and banks. Once dubbed a 'value trap', investors now harbour a clear value bias in Japan, as corporate governance reforms slated to be the most closely watched event this year take centerstage, BofA said.

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"The China equity market, in particular, failed to obtain the nod of approval from survey participants, with the majority willing to sit out/avoid at the moment, including 15 per cent who are looking to cut risk on any bounces. Tellingly, China allocation struck a new low as investors brace for a structural de-rating, given their belief that the propensity among Chinese households to preserve cash rather than spend/invest is here to stay," it said.

 

 

Also read: Stock recommendations by analyst for February 15: GAIL, PNB and Axis Bank

Also read: NHPC shares surge 9% in early trade, log high turnover; check details

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
Published on: Feb 15, 2024 10:54 AM IST
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