India has once again affirmed its growing clout in the global equity markets, with the latest Fund Manager Survey (FMS) by BofA Securities revealing that India is the most preferred equity market in the Asia-Pacific (Asia Pac) region. This notable positioning places India above traditional giants such as Japan, China, and Singapore, reflecting a larger shift in global investment dynamics amid changing economic and geopolitical factors.

According to the BofA Securities FMS survey, a net 42% of fund managers chose India as their top destination, compared to 39% for Japan, 6% for China, and 3% for Singapore. This shift highlights India’s growing appeal, particularly in light of supply chain realignments stemming from global tariff changes and diversification away from China.

The survey was conducted between May 2 and May 8, 2025, and involved 208 participants who collectively manage Rs. 47,12,424 crore (US$ 522 billion) in assets under management (AUM). Among these, 174 responded to global questions, overseeing Rs. 39,09,946 crore (US$ 458 billion) in AUM, and 109 responded to regional questions, managing Rs. 19,97,658 crore (US$ 234 billion) in AUM.

Why India Stands Out

India's rise to the top of the Asia-Pacific equity landscape is not a sudden occurrence but a reflection of structural economic reforms, policy consistency, and the nation’s rapid digital and infrastructural transformation. Key investment themes identified by the fund managers include infrastructure and consumption, areas where India has been driving substantial growth.

The ongoing economic revival across the Asia-Pacific region is another contributing factor. While 58% of survey respondents still expect an earnings slowdown, this is a marked improvement from 78% in April 2025. Furthermore, pessimism around the global economy and the Asian economy has decreased significantly — from 82% to 59%, and from 89% to 77%, respectively. This improving sentiment, especially in Asia, is proving beneficial for emerging economies like India.

Comparative Preferences in Asia

While India has gained in fund manager preference, Japan has slipped, losing its earlier top spot. Nevertheless, Japanese equities still remain strong, with sectors such as banking and real estate being favoured.

In China, sentiment has improved from last month, moving up to the third position. AI and semiconductor companies, along with firms likely to announce share buybacks or dividends, are the preferred investment themes.

Thailand, on the other hand, continues to be the least preferred market in the Asia-Pacific region, suggesting deeper concerns about macroeconomic stability or limited growth potential compared to other emerging markets.

Sectoral Allocation Trends

Within the Asia ex-Japan portfolio, fund managers are now overweight on telecom and software sectors, which aligns with India’s strong presence in global IT and telecom service offerings. Conversely, sectors like energy, materials, and consumer discretionary (excluding e-commerce and retail) have seen underweight allocations.

Interestingly, optimism in the semiconductor cycle is also growing. Only 42% of fund managers expect a slowdown in semiconductors, a significant improvement from 59% in April. This also has implications for India’s ambition to become a global semiconductor hub, with various policy initiatives already underway to support fabrication and chip design.

Global Trends Supporting India’s Position

One of the core reasons behind India’s rising appeal lies in the supply chain diversification trend. As multinational corporations look to reduce dependency on a single nation — especially China — they are actively exploring countries like India for manufacturing, sourcing, and distribution.

The ‘China+1’ strategy, which encourages companies to expand or relocate manufacturing bases outside China, is finding a natural partner in India’s large skilled workforce, business-friendly environment, and robust digital infrastructure.

India’s Domestic Growth Story

On the domestic front, India’s economy is witnessing robust growth across multiple sectors. The government's infrastructure push through flagship schemes like the PM Gati Shakti Master Plan, combined with PLI (Production Linked Incentive) schemes, is drawing substantial interest from global investors.

Furthermore, private consumption in India remains a major growth engine. With a burgeoning middle-class population, increasing urbanization, and rapid digitisation, India is poised to sustain high growth over the next decade, making it a lucrative destination for long-term equity investors.

Fund Manager Confidence in Macro Stability

Another underlying strength of India’s equity market is macro-economic stability. With inflation under control, a resilient currency, and manageable fiscal deficits, India continues to offer a stable investment environment amidst global volatility.

The Reserve Bank of India’s (RBI) prudent monetary policy and the central government’s consistent efforts to attract foreign direct investments (FDI) and institutional capital further instil confidence among fund managers.

Asia-Pacific Sentiment Overview

While India leads, the broader Asia-Pacific region is showing signs of gradual recovery. Concerns about global recession have eased, and the ongoing semiconductor upcycle is benefitting multiple markets. Additionally, technological innovation, particularly in AI, fintech, and green energy, is reshaping investor expectations.

However, India’s momentum stands out due to the combination of macro stability, policy continuity, demographic advantage, and an ambitious growth agenda.

Conclusion

The BofA Securities Fund Manager Survey presents a clear signal: India is now the most attractive equity market in the Asia-Pacific region. As global fund managers recalibrate their portfolios to reflect shifts in economic sentiment and structural growth, India’s infrastructure boom, consumption strength, and digital evolution place it firmly at the top of their radar.

With continued economic reforms, a thriving startup ecosystem, and a rising share of global FDI and institutional investments, India’s capital markets appear set for a sustained bull run in the coming years.

For investors looking for stability, long-term growth, and dynamic sectoral opportunities, India represents a rare blend of resilience and opportunity, reaffirmed once again by its leading position in Asia-Pacific equity preferences.

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