India has edged ahead of Japan to become the most preferred stock market in the Asia Pacific region, according to the latest Fund Manager Survey (FMS) by BofA Securities.
The shift comes amid renewed investor interest in Indian equities, driven by themes like infrastructure push, rising consumer demand, and realignments in global supply chains.
In the May edition of the survey, 42% of fund managers said they were overweight on India, while Japan followed closely at 39%. China—often viewed with caution in recent months—managed to inch up to third place with a 6% vote.
Singapore attracted 3%, and Thailand, despite being a regular contender in the region, remained at the bottom of the list.
Fund managers appear to be positioning themselves around countries expected to gain from shifts in global trade patterns. India, with its expanding infrastructure and domestic consumption story, is increasingly being viewed as a likely winner. As BofA noted in its findings, India is “perceived as a likely beneficiary of supply chain re-alignments following tariff effects.”
Within Indian markets, sectors like infrastructure and consumption continue to be the top draw for investors, suggesting that the focus remains on long-term, stable growth themes.
There seems to be a slow recovery in confidence across the broader Asia Pacific region. While 58% of fund managers still expect an earnings slowdown, that’s an improvement from 78% in April. In simple terms, more investors are now entertaining the possibility that earnings might just surprise on the upside.
At a global level, too, the gloom is lifting—though only just. Around 59% still see the global economy weakening, but that's down from 82% in the previous month. In Asia, 77% foresee a softer economy, compared to a much gloomier 89% outlook earlier.
The mood on China seems to be cautiously shifting. Last month, 26% of respondents said they were looking to avoid Chinese equities. That number has now fallen to 16%. Even more notably, 10% of fund managers said they are fully invested in China—the highest share seen in this survey’s history.
It’s worth noting that these responses were recorded before the May 8 meeting between US and Chinese officials in Geneva, which was followed by news of possible tariff reductions. That development could potentially brighten sentiment towards China even further in the coming weeks.
In Asia ex-Japan portfolios, fund managers are favouring telecom and software, while giving a cold shoulder to sectors like energy, materials, and consumer discretionary—particularly outside retail and e-commerce.
The semiconductor sector, once a major concern, seems to be making a slow comeback. Only 42% of managers now expect the chip cycle to slow down, down from 59% just a month ago.
In Japan, banks continue to be the top pick, likely due to expectations of higher interest rates. Real estate has quietly moved up to second place in terms of investor interest. Japan might have lost the top Asia Pacific spot to India, but it’s still seen as a steady play.
