18% of global fund managers overweight on Indian equities: BofA survey

Fund managers globally, BofA Securities said, are most bullish on equities in nearly three years (since November 2021), driven by optimism on a cut in interest rates by global central banks rather than earnings per share (EPS) growth. 

18 per cent of fund managers surveyed by BofA Securities are overweight on Indian equities, though the level of optimism has dipped from March 2024 levels, their findings suggest. 

Meanwhile, cash levels with global fund managers in May, BofA Securities said, are down to a three-year low of 4 per cent, with allocation to stocks at the highest level since January 2022.

 

A total of 245 panelists with $642 billion worth of assets under management (AUM), BofA Securities said, participated in the survey held between May 3 and May 9, 2024. While 209 participants with $562 billion worth of AUM responded to the global FMS questions, 134 participants with $301 billion worth of AUM responded to the regional FMS questions. 

Japan, with a net 44 per cent of global fund managers, tops this preference list for equity markets in the Asia Pacific (APAC) region, BofA Securities said, followed by Taiwan at 21 per cent. 

Thailand (net negative 18 per cent), Indonesia and Australia (net negative 15 per cent each), on the other hand, are some equity markets in the PAC region where global fund managers are least bullish and remain underweight. FULL LIST HERE

"Among markets, Taiwan and India are the go-to destinations after Japan, although the latter (India) has been losing its shine since March. At the other end of the spectrum, Thailand remains unloved as even panicked sentiment has failed to lure contrarians in." the BofA Securities said.

Frontline Indian stock indices, meanwhile, have been a mixed bag since March 2024. While the S&P BSE Sensex has slipped 0.9 per cent since then, the mid-cap and the small-cap indices on the BSE have gained 6.5 per cent and 7.8 per cent respectively since then, shows ACE Equity data.

Japan & China equity markets

Japan, BofA Securities said, continues to be the market of choice for investors, with a long runway ahead as close to half of the panelists do not expect it to peak anytime soon. 

“The FMS thinks the equity market will be predominantly FX-driven this year, although corporate reforms and Bank of Japan (BoJ) policy will also be key in shaping the course of the market. China equity market is 28 per cent off the January lows on burgeoning hopes of a turnaround as policymakers seek to address investor concerns. A net 41 per cent of the global fund managers expect the China economy to strengthen over the next 12 months, versus -10 per cent in February,” BofA Securities said.

In this backdrop, stock market investors in China have relinquished the wait-and-watch approach in favor of building exposure on incremental signs of easing and wiped out the underweight allocation from prior months, BofA Securities said, as the breadth of panelists favoring China surged to an 8-month high.