Global investors are shifting from AI-heavy stocks to Indian and Chinese equities after the US midterm elections. This change is driven by a reevaluation of investment strategies as the AI trade unravels. It is impacting major Asian markets. Aberdeen Investments points to stronger domestic growth in India and Vietnam as attractive factors. The firm also sees potential in Chinese technology firms.
Key Details
The fallout from the Democratic victories has particularly affected companies like Samsung Electronics and Taiwan Semiconductor Manufacturing Co. These firms are crucial to the global AI infrastructure. Investors are now questioning whether the large investments in AI will provide enough returns. Rajeev De Mello, global macro portfolio manager at Gama Asset Management, said, "I expect investors to diversify more broadly and reduce their concentration in the AI trade. This should be supportive of China and other markets where valuations are less demanding."
Background
India's appeal is boosted by falling oil prices. This could help reduce its dependence on energy imports. Hedge fund Lotus Asset Management is betting against oil and petrochemical firms. They are favoring precious metals and Hong Kong equity futures. A Hong Kong index tracking mainland companies rose 5.2% last week. This marks its best performance since March 2025. Some investors are also looking to China's onshore market as a way to diversify their portfolios. This is according to Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas SA.
This shift could increase demand for Indian and Chinese stocks. This is especially true in sectors like healthcare and consumer goods. Investors are seeking alternatives to AI-focused investments. The drop in oil prices may also support Indian equities by easing inflationary pressures. Watch for further developments in global fund allocations and the performance of Asian markets in the coming weeks.
Based on reporting by: livemint.com, businesstimes.com.sg