In a recent survey conducted by Bank of America (BofA), Japan and India emerge as the most favored markets in the Asia Pacific region. The fund manager survey (FMS) indicates a robust inclination towards Japan, securing a net 45 percent overweight position, followed by India at 25 percent. Notably, Thailand stands at a net 13 percent underweight, while China and Australia each hold a net 9 percent underweight position.
The survey highlights the prevailing optimism among investors, particularly in anticipation of lower rates and a weaker dollar. BofA’s equity strategist, Ritesh Samadhiya, emphasizes the significance of this trend in the context of the investor playbook for 2024, which revolves around expectations of a soft landing, lower rates, a weaker US dollar, and a preference for large-cap technology stocks. Investors are considering averaging investments in China and leveraging opportunities.
Furthermore, the survey indicates a reduction in cash holdings from 5.3 percent to 4.7 percent, marking the lowest level in two years. Additionally, fund managers have moved towards the most substantial bond overweight since March 2009.
While the global FMS reflects caution about the macroeconomic outlook, with 57 percent of participants anticipating a weaker global economy in the next 12 months, the Asia FMS presents a more optimistic view. A net 24 percent of participants foresee a strengthening of the Asia Pacific ex-Japan economy in the next 12 months, with return expectations surpassing long-term averages.
Investors are looking towards double-digit returns, placing their optimism on fundamental factors, as outlined in the survey. This nuanced market sentiment reveals a dynamic landscape, characterized by evolving preferences and strategic considerations among global investors.
