India Among Least Preferred Markets In Asia Pacific, Japan Most Preferred: BofA Survey

India is among the least preferred markets in the Asia-Pacific region, whereas Japan is currently the most preferred, according to the Bank of America's Fund Manager Survey.

China has risen to occupy the second position in the list, BofA said in a note issued on Tuesday, citing the findings of its survey. "Thailand is the least preferred, with India, Indonesia, and Korea trailing closely behind," it added.

The Asia-Pacific-centered survey of BofA was based on the responses gathered from 107 fund managers with $193 billion in assets under management. A total of 44% of the respondents were "overweight" in Japan, 9% in China, and 3% in Singapore and Malaysia.

On the flip side, 16% of the respondents were 'underweight' on Thailand; 13% each were underweight on India, South Korea and Indonesia; 9% on Australia; and 6% on Taiwan.

Among major Asian markets, the Indian market has given negative year-to-date returns of 9% in dollar terms, whereas China has given positive returns of 20.7% in the same period, according to BofA.

High valuations remain a concern for the Indian markets, with a price-to-earnings ratio of 20.5, as opposed to 11.9 in the case of China, as per the note.

Meanwhile, Japan's market has a P/E ratio of 14.1; it has given returns of 3.6% in 2025 so far.

In the Asia Pacific region, excluding Japan, the survey respondents are overweight on sectors like software, tech hardware, telecom and banks, while avoiding sectors like real estate, materials and utilities.

A total of 38% among the respondents were overweight on software, 28% on telecom, 25% on banks, 22% on tech hardware, 13% each on retailing and e-commerce, and 6% on industrials.

On the other hand, 34% were underweight on real estate; 28% on materials; 25% on utilities; and 19% on energy.

BofA, which also conducted a simultaneous survey among global fund managers, said the global economic growth forecast "experienced the largest one-month drop since June 2022," primarily attributed to uncertainty stemming from policy decisions and rising tariff threats.

Asia's ex-Japan growth prospects also slipped, with a net 25% of the participants "seeing a weaker economy 12 months out," which is the weakest since September 2022, it added.

Europe stands out as the sole region exhibiting an enhanced growth outlook, with 60% of survey respondents anticipating a stronger economy. This marks the second highest level of optimism since July 2021, largely attributed to fiscal initiatives enacted by Germany, BofA further said.

Despite the decline in the Asia ex-Japan economic outlook, the panellists' expectations for equity returns remain optimistic, with over 90% predicting a higher level a year from now, according to the broking. A record proportion of participants saw consensus earnings per share growth estimates for the region as "too low" against the backdrop of fair valuations, it noted.