India is now least favored Asian stock market, BofA survey shows
August 13, 2025 / 12:19 IST
That marks a sharp reversal from May’s survey, which showed India displacing Japan as the most favored market due to its perceived haven status during Trump’s initial tariff rollout
India has gone from fund managers’ top Asian stock market pick to their least preferred in just three months amid US President Donald Trump’s tariff escalation, according to a Bank of America Corp. survey.
In the most recent fund manager survey, 30% said they are underweight on India, followed by 20% for Thailand and 10% for Malaysia. Japan fared the best, with China taking the No. 2 spot. A total of 99 panelists with $183 billion of assets responded to the survey’s regional questions.
That marks a sharp reversal from May’s survey, which showed India displacing Japan as the most favored market due to its perceived haven status during Trump’s initial tariff rollout. The change in sentiment for the $5.2 trillion equity market underscores growing investor concern about Trump’s decision to double levies on the South Asian country’s goods as a penalty for its purchases of Russian oil.
“India is affected by President Trump‘s announcement of 50% tariffs,” strategists including Ritesh Samadhiya wrote in a Aug. 12 note. That contrasts with other markets in the region including China, where the tone has “become more enthusiastic.”
Trade angst, weak earnings and expensive valuations have prompted global funds to withdraw about $4 billion from Indian shares this quarter, though domestic institutions and retail investors have ramped up purchases. The nation’s stocks-focused mutual funds, which get the bulk of their flows from individual traders, pulled in a record 427 billion rupees ($4.9 billion) on a net basis in July, data from the Association of Mutual Funds in India showed.
Still, Indian stocks registered their worst weekly losing streak since the onset of the Covid-19 pandemic last week, and have lagged major Asian peers this year. Chinese shares outperformed their Indian counterparts by about eight percentage points in July — the most since February.
“Trump’s harsh tariffs and the straining of relations between US and India have impacted market sentiment,” said V K Vijayakumar, chief investment strategist at Geojit Investments. Tepid earnings growth and elevated valuations have “emboldened the bears to increase the short positions,” he said.