Investors Expect Limited but Steady Returns from Asian Equities Outside Japan
Survey Results Reflect Growing Optimism
According to a recent survey by BofA, investors are anticipating consistent yet modest returns from Asian equities excluding Japan over the next 12 months. The survey, conducted in early May, revealed that a majority of fund managers foresee returns ranging from 5% to 10% in this sector.
Positive Outlook on Chinese Economy
The survey also highlighted a significant shift in sentiment towards the Chinese economy, with 41% of respondents expecting a strengthening economy in the next year. This optimism marks a substantial increase from the mere 10% seen in February, reflecting growing confidence in China’s economic recovery.
Rising Expectations Amid Market Recovery
Chinese equities have experienced a remarkable rebound from their low point in February, buoyed by supportive measures implemented by Beijing for local stocks and the property market. This recovery, coupled with expectations of robust earnings, has fueled optimism among fund managers regarding the broader equities market.
Preference for Specific Sectors and Markets
Fund managers are particularly bullish on semiconductor stocks, as well as the technology and industrials sectors. However, they are cautious about utilities and real estate investments. Among regional markets, Taiwan and India stand out as top picks, although interest in India appears to be waning since March. Conversely, Thailand remains unattractive to fund managers due to ongoing political turmoil.
Japan’s Enduring Appeal
Despite lagging behind regional equities in April, Japan remains a favored market among fund managers. The country’s record-high stock prices and a weak yen have sustained investor interest, with many believing that there is still room for growth in the Japanese market. The Bank of Japan’s monetary policies and potential tightening measures are expected to influence the trajectory of Japanese equities in the coming months.
