India Overtakes Indonesia as Asia’s Least Preferred Stock Market
By Market Desk
A Bank of America poll reveals India has replaced Indonesia as Asia’s least-preferred stock market, citing investor caution due to AI exposure concerns and weak growth.
India has replaced Indonesia as Asia’s least-preferred stock market, according to a recent Bank of America Corp. survey. This shift signals increasing investor caution towards Indian equities, which are among the world’s poorest performers this year.
Fund managers cited several key concerns driving this bearish sentiment. These include a lack of clear exposure to Artificial Intelligence (AI) and weak growth prospects within the Indian market.
Key Investor Concerns on India
- 32 percent of survey respondents are net underweight on India.
- Concerns include perceived lack of reforms.
- High valuations contribute to the bearish outlook.
- Climbing energy prices following the US-Iran war also impact sentiment.
The survey encompassed 98 panelists overseeing $272 billion in assets. India was last identified as the least preferred in the BofA poll in May, also due to growth pressures from rising energy costs.
Indonesia’s Shifting Sentiment
In contrast, Indonesia has seen an improvement in investor sentiment. The percentage of fund managers net underweight on its market decreased from 32 percent in July to 27 percent.
This improved sentiment for Indonesia is linked to a more than 20 percent rally in its benchmark Jakarta Composite Index since June. This rally was driven by the central bank’s currency stabilization measures and reduced concerns over a potential MSCI Inc. downgrade to frontier-market status.
Market Performance and Earnings
Taiwan and Japan continue to be the most favored regions among investors. Despite a strengthening earnings outlook for Indian stocks, investor wariness persists.
- Global funds invested over $4 billion in Indian stocks this quarter.
- This follows record outflows during the first half of the year.
- Earnings for NSE Nifty 50 members rose 18 percent year-on-year in the latest quarter.
- This surpassed Motilal Oswal Financial Services Ltd.’s 10 percent growth estimate.
The Nifty 50 has rebounded 8 percent from its March low but remains the second-worst performing major Asian market this year, having lost 8 percent. The index is currently on track to end a decade-long streak of annual gains, underscoring the challenges facing Indian equities.