BofA 241112 Asia Fund Manager Survey
Trading ideas and investment strategies discussed herein may give rise to significant risk and are not suitable for all investors. Investors should have experience in relevant markets and the financial resources to absorb any losses arising from applying these ideas or strategies. >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 14 to 16. 12762925 Asia Fund Manager Survey Japan, and the rest Whiff of inflation. APAC ex-Japan bucked global trends to see a moderation in growth expectations, while other regions flourished, in a reflection of recent economic data. Yet, the regional inflation outlook followed a global move up to spike to long-term averages. Positively skewed. The FMS recalibrated its APAC ex-Japan equity return expectations a touch down as profit expectations normalize, while valuations push to stretched levels. On the fence. As the initial optimism simmers down, the FMS has re-aligned to a more balanced view on China. Investors hold on to their calls for a stronger economy a year down the line but prune their spending expectations to more conservative levels than initially perceived. The market view looks contained for the near term as a third of the panelists seek to wait-and-watch, but for a change, investors see a marked improvement in the long-term proposition with structural de-rating views near a two-year low. The immovable force. The FMS take on Japan is seemingly unfazed by developments within and outside the country. The surprise election results notwithstanding, investors stick with their optimism, based on the view that FX and earnings will reign supreme. Market allocation. Japan is, by some distance, the most preferred market in the region, followed by China at the second spot. Meanwhile, India – a prior investor favorite – has lost its shine with the premonition of further downside in the coming months. Korea seems similarly gloomy, with the corporate value-up program yet to garner traction. Sector allocation. Despite a whipsaw down in the semiconductor cycle outlook, FMS technophilia is still at large in Asia, while materials lag. In China, too, AI/semis and internet remain popular with buyback/dividend stories slowly gaining investor interest. Exhibit 1: Japan stays the favorite market in the region, with China a distant second Net % FMS investors overweight: % saying overweight - % sayi
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