India has emerged as the most preferred equity market in the Asia-Pacific region, according to the latest Fund Manager Survey (FMS). The survey shows that a net 42 percent of fund managers favor India over other Asia-Pacific markets. Japan follows close behind at 39 percent, while China, which had previously ranked lowest, climbed to third place with a 6 percent preference.
This shift in preference is largely driven by strong consumption trends, significant infrastructure development, and ongoing supply chain realignments. The findings noted, “India emerges as the most favored market, perceived as a likely beneficiary of supply chain re-alignments following tariff effects.”
The survey included responses from 208 global panelists managing $522 billion in assets under management (AUM). Of these, 174 participants with $458 billion in AUM responded to the global FMS segment, while 109 panelists with $234 billion AUM took part in the regional Asia-Pacific segment, covering the period between May 2 and May 8, 2025.
The survey highlighted an improving sentiment around economic growth in the Asia-Pacific region. While 58 percent of fund managers still expect a slowdown, this number has declined from 78 percent in the previous month, signaling a potential turnaround in outlook. Additionally, current earnings forecasts are not viewed as overly optimistic, suggesting room for upward revisions.
Globally, pessimism is easing. A net 59 percent of fund managers still expect a weaker global economy, down from 82 percent last month.
India tops Asia equity markets
Meanwhile, 77 percent now forecast a softer Asian economy, compared to 89 percent in the prior survey. The mood on China has become increasingly constructive. Only 16 percent of respondents said they are actively seeking opportunities outside China, compared to 26 percent a month ago.
A record 10 percent of participants reported being fully invested in the Chinese market. Notably, the survey was conducted before the May 8 US-China meeting in Geneva, which was followed by an announcement regarding tariff reductions—potentially further boosting sentiment towards Chinese equities. In Asia ex-Japan portfolios, fund managers were seen overweighting telecom and software sectors while underweighting energy, materials, and consumer discretionary (excluding retail and e-commerce).
Sentiment towards the semiconductor sector has also improved, with only 42 percent now expecting a slowdown in the chip cycle, down from 59 percent last month. In addition to India’s strong showing, banks continue to be the most preferred investment theme in the region, supported by the backdrop of higher interest rates. Real estate has climbed to the second spot in terms of sectoral preference.
Meanwhile, in China, investors favored themes around AI, semiconductors, and companies likely to announce buybacks or dividends. India’s emergence as the most preferred equity market in the Asia-Pacific region underscores growing global investor confidence in its long-term economic fundamentals and sector-specific growth stories. With fund managers continuing to eye infrastructure and consumption as key themes, and broader regional sentiment improving, Indian equities appear well-positioned to attract sustained institutional flows in the coming months.
