Asia takes over as the favored hunting ground for global equity bulls
Global fund managers are pivoting to Asian equities for the next growth leg as the S&P 500 stalls near record highs. Inflows to Hong Kong, Tokyo and Mumbai have reached a decade-high pace this year, recasting the cross-border allocation map.
After two years of US leadership, the centre of gravity of the global bull market is shifting. A Bank of America survey shows large fund managers lifted their Asian equity allocation in May to the highest level in a decade, with fresh money into Hong Kong, Tokyo and Mumbai funded by trims in European and US positions.
The rationale is macro. The dollar is weakening, China's April export print beat expectations on the back of resilient industrial output, and Japanese earnings momentum continues. In India, domestic consumption and infrastructure spending have pushed the MSCI India index to a high single-digit gain year to date. The S&P 500, by contrast, has been stuck in a tight range ahead of the Trump-Xi summit.
For Latin America the rotation cuts both ways. Brazil and Mexico are commodity exporters tied to Asian demand, but as portfolio flows reroute, the IPC and Bovespa risk losing some foreign money. Investors are now debating how to balance the trade.
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