The unraveling of the AI trade after the US midterms is forcing investors to rethink their Asia playbook, reviving demand for out-of-favor Chinese and Indian stocks. Aberdeen Investments favors markets powered by stronger domestic growth, including India and Vietnam, while Lotus Asset Management bets on Hong Kong equity futures and precious metals. Hedge fund Lotus Asset Management is long Hong Kong equity futures, while Allianz Global Investors looks at healthcare and consumer companies.
A Hong Kong gauge tracking mainland companies gained 5.2% last week, its best performance since March 2025. Meanwhile, some global investors are interested in using China's onshore market exposure as a diversifier to their AI-heavy portfolio. India's appeal has grown as oil prices declined on expectations of an earlier end to the Iran war, easing a key pressure point for the energy-importing economy.
The market's lack of AI exposure is now seen as an advantage. LOGOS Asset Management's Charlie Hong sold shares in SK Hynix, Samsung Electronics, Intel and Lumentum last month, boosting Indian holdings. India's benchmark Nifty 50 gained 8.6% last week, its best week since 2021, as foreign funds poured a net $1.9 billion into local shares.
Foreign investors are suddenly pouring in, said Utkarsh Singh of SBI-SG Global Securities. Before the latest gains, key benchmarks in India and China had ranked among the world's worst-performing stock indexes this year through October.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing