India Tops Asia as Most Preferred Equity Market, BofA Survey Finds
| 2025-05-15
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India surpasses Japan to become Asia’s top stock market for investors, according to a BofA survey, driven by strong infrastructure and consumption themes.
India overtakes Japan as top investment destination in Asia
India has become the most favoured stock market in Asia, overtaking Japan, according to a new fund manager survey by Bank of America. The survey found that 42% of respondents held an overweight position on Indian equities, signalling rising investor confidence amid shifting global trade dynamics and supply chain strategies.
The results reflect a significant reordering of investor preferences in the region. Japan, which previously led the rankings, now sits in second place with 39% of fund managers reporting an overweight stance. China, meanwhile, showed signs of recovery, climbing from the bottom to the third spot with 6%.
Shift driven by supply chain changes and consumption growth
According to the Bank of America report, India’s appeal is underpinned by two key structural trends: infrastructure development and growing domestic consumption. These themes have made India an increasingly attractive market for global investors looking to reduce exposure to export-reliant economies and geopolitical uncertainty.
“India emerges as the most favoured market, perceived as a likely beneficiary of supply chain re-alignments following the effects of tariffs,” the report said. Strategists noted that the country's emphasis on internal demand over exports gives it resilience amid global volatility.
The shift comes as international investors reassess their portfolios in response to ongoing economic uncertainty, lingering effects of pandemic-related disruptions, and a recalibration of global supply routes away from China.
Investor pessimism receding
The survey also indicates a broader easing of investor pessimism. While 59% of fund managers still expect a weaker global economy, this marks a notable improvement from 82% the previous month — the most negative sentiment recorded in the survey's history.
Similarly, concerns about corporate earnings are showing signs of moderation. A net 58% of fund managers foresee a slowdown in earnings, down from 78% a month earlier. Consensus estimates across Asia remain cautious, but analysts suggest that if economic momentum strengthens, earnings forecasts could see upward revisions.
China’s recovery reshapes regional sentiment
China's move to the third spot marks a surprise rebound. The country's market had previously been the least favoured, but improving trade relations with the United States appear to have restored some investor confidence. Easing geopolitical tensions and the prospect of more stable economic policies may be drawing capital back into Chinese equities.
Thailand continues to rank as the least preferred market in Asia.
Caution from other quarters
Despite India's current position, some analysts caution that the momentum could shift. Brokerage firm CLSA warned that India's relative outperformance could be challenged as trade tensions between China and the United States cool and regional geopolitics stabilise.
“The rise in these fears made India a hiding place and second-best performing market since March,” CLSA stated. However, it noted that a reduction in global uncertainty could redirect investment flows away from India and back toward Chinese or other Asian equities.
Outlook supported by economic fundamentals
India's stock markets have performed well in recent months, with the Nifty 50 Index outpacing many regional peers. Analysts at Sanford C. Bernstein project further gains, forecasting up to 7.6% growth by year-end, supported by factors such as rural demand, liquidity improvements, and tax policy measures.
“We believe the markets are positioned well,” said strategist Venugopal Garre, pointing to signs of improving earnings and macroeconomic stability.
Context: India’s evolving role in Asian markets
India's rise as Asia’s most preferred equity market reflects broader economic realignments. As multinational companies seek to diversify supply chains and reduce overdependence on China, India is seen as a viable alternative, offering scale, a growing consumer base, and relative political stability.
While global economic headwinds remain, India’s performance suggests that the country is benefiting from both structural reforms and external shifts. Whether this momentum continues may depend on global trade trends, geopolitical developments, and the strength of domestic economic indicators.
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