Economic Times: October, 2015
Mumbai: India's policy measures, be it from RBI or the government, are finally catching the fancy of global investors as they are betting the most on India compared to other Asian peers, show a global survey by Bank of America Merill Lynch conducted among 164 market participants.
Most investors from Asia Pacific ex-Japan region are now overweight on India, and see it as the most preferred investment destination.
"Asia Pacific ex-Japan investor views India moved back to being the market most investors would overweight in October, followed by China, while investors scaled back their Korea overweight views," the survey said. "Sentiment for Taiwan reduced as it went from being the most favored market to a market weight position."
Two weeks ago, RBI governor Raghuram Rajan reduced the borrowing cost more than what it was estimated. The government too has been doing its bit through liberal policy measures like public sector bank reforms, hiking investment limit for overseas investors.
Investors reduced their net underweight positions in Malaysia and Australia. Surprisingly, Indonesia and the Philippines moved from net overweight positions to net underweight and neutral, respectively.
A recession risk in China has come down so compared to September, investors observed. China's sluggish growth have been triggering investor concern across global markets as it affects global demand.
A majority of survey respondents believe, Chinese economy will see some improvement in the next 12 months and are also less bearish on China's growth prospects (close to 70% of investors expecting 2018 GDP growth to be greater than 5% vs 40% last month), investors do not want exposure to EMs. So, what is the trade strategy?
The most crowded trades continue to be shorting EM equities, commodity stocks and EM FX as a challenging macro environment, a worsening earnings outlook, a strong US dollar and potentially higher bond yields continue to weigh on EMs.