Optimism over Chinese stimulus measures has caused investors to review their stance on China. In particular, the rise in sentiment towards China is coming at the expense of India. In addition, rising growth expectations for China have also lifted the outlook for APAC excluding Japan to its highest level in 20 months, according to a survey of Asian fund managers by BofA Securities.
While fund managers favor Japan as their favorite market in the Asia-Pacific region, they have become grudgingly bullish on China after the recent wave of stimulus. On the other hand, they expect sustained poor performance for Korea, with limited investor interest in the corporate valuation program.
After announcing the most aggressive monetary support measures since the pandemic, China further pledged to significantly increase debt to revive its faltering economy. “Growth expectations for China came back to life following the political turn,” BofA Securities wrote in a note to investors on Tuesday.
Meanwhile, foreign portfolio investors (FPIs) have been dumping Indian stocks in all trading sessions this month till October 15. Foreign investors have cumulatively sold $7.3 billion worth of Indian stocks so far in October and are heading for the biggest monthly outflow since the height of the crisis. Pandemic in March 2020.
According to the survey, a larger number of fund managers were overweight in India in August compared to the current number of investors. This has resulted in a wider gap in their allocations. Among sectors, technology continues to capture the majority of the fund, with financial services and consumer discretionary joining the post-policy actions in China. On the other hand, real estate is at the other end of the spectrum.
India, the most expensive stock market in the region, has seen some sell-offs in the recent past. The benchmark Nifty50 index has plunged nearly 5% from its all-time high, while China’s Shanghai Composite has soared nearly 19% since mid-September.
At 24,971.30 points, the Nifty50 is trading at 20.7 times its one-year forward earnings, which is higher than its long-term average. By comparison, China’s Shanghai Composite is valued at 11.8 times, about 3% below its 10-year average, according to Bloomberg data.
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(Edited by: Poonam Behura)
First published: October 16, 2024 19:29 IS
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