Asian Fund Managers Are Careful but Hopeful about Asian Markets, Most Bullish on Japanese Stocks

Asian fund managers currently expressed strong optimism toward Japanese stocks regardless of Japan’s uncertain monetary policy. This perspective is underscored by a recent Bank of America (BofA) survey conducted in early November, which included 213 panelists managing a combined $565 billion in assets. The survey revealed that Japan holds the highest Overweight position concentration in Asia, with 45% of respondents indicating a preference for Japanese stocks. This bullish sentiment continues even though Japanese stock values have leveled off after a late-October rally, due to tempered profit and return expectations and the persistence of high valuations.

While Japanese equities remain the preferred investment target among Asian markets, sentiment toward China appears more measured. Though fund managers remain hopeful for economic growth in China, their expectations for further stimulus from Beijing have slightly declined. Only 8% of respondents held Overweight positions in China, compared to Japan’s dominant favors. Nonetheless, Chinese stocks related to artificial intelligence, semiconductors, and internet technologies attract managers’ interest, especially as companies emphasize stock buybacks and dividends.

Other markets in Asia received mixed reviews, with 5% of respondents favoring the Philippines and Taiwan. Meanwhile, 8% held Underweight positions in both Australia and India, with 11% similarly cautious about South Korea. In terms of sector preferences, “technophilia” prevails, as technology-related assets—despite recent volatility in semiconductor stocks—remain attractive across various Asian markets.

The survey also reveals a cautious yet hopeful outlook for Asia amid global political shifts. The potential for a second Donald Trump presidency brings concern, especially given his previous stance on imposing tariffs on China and other Asian nations. Investors are monitoring Trump’s approach to trade policy, particularly tariffs, as it could pose economic challenges for the region.