Here is how Asian Fund Managers are looking at India and China for investments in the next 12 months.
Most long-only funds are underweight India and most hedge funds are running short positions on India, while almost 100% of the funds are overweight on China. The reason they are betting on China over India is the perception that China’s far stronger fiscal position, continued large current account surplus and large Fx reserves give it the flexibility to provide large economic stimulus in the form of infrastructure spending. India faces a number of worries, among them, uncertainty on outcome of the imminent general elections, rising fiscal deficit, and premium valuations. YTD, China’s A share index up ~30% , whereas BSE Sensex is down 8.3%.
67% of funds surveyed are underweight on tech or have short positions on techs, whereas ~ 40% funds are underweight on Real Estate and Cyclicals. Uncertainty on clients’ tech budgets in FY10 and expectations of rupee appreciation are key reasons for clients running an underweight position on techs.
While almost 40% of the funds we polled expect global cyclicals to retest their recent lows, more than 80% expect crude to behave differently from other commodities and rise from here on.
Its been over 3 months I have been telling myself to start an SIP in an Asian Fund. I will review one and post my analysis here.