Asian Fund Managers Boost Confidence in China as Japan Remains Top Pick

Asian fund managers are increasingly bullish on Chinese equities, marking the highest level of optimism in years, according to a recent Bank of America (BofA) survey. A record number of investors no longer view China’s market as structurally bearish, driven by expectations of rising household spending and investment.

Despite this shift, Japan remains the most favored market, though enthusiasm has slightly declined. The survey found that 59% of investors expect Japan’s economy to strengthen over the next 12 months, down from 73% last month. Analysts cite ongoing focus on Bank of Japan policies, currency movements, and corporate reforms as key factors influencing sentiment.

China has now overtaken other markets to claim the second spot in investor preference, while Thailand remains the least favored, followed closely by India, Indonesia, and Korea.

In terms of sector allocation, fund managers are overweight in software, telecom, banking, and tech hardware but have cut exposure to real estate, materials, and utilities. Interest in semiconductors has weakened, with just 13% of investors expecting the cycle to strengthen—the lowest sentiment since October 2022.

The BofA survey polled 205 fund managers overseeing $477 billion in assets between March 7-13. As investor sentiment shifts, market watchers are closely monitoring macroeconomic trends, corporate policies, and regional growth potential.