Trading ideas and investment strategies discussed herein may give rise to significant risk and are not suitable for all investors. Investors should have experience in relevant markets and the financial resources to absorb any losses arising from applying these ideas or strategies. >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst under the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 12 to 14. Asia Fund Manager Survey February FMS: don’t change a winning combination Signs of a break-out (ex-China) The Global Fund Manager Survey (FMS) view of the global economy has risen to a 2-year high after a protracted period of gloom, echoing the optimism of our proprietary growth indicators. See BofA GPS: Anatomy of a bull market 30 January 2024. The outlook for the regional economy moved up in tandem, with net 29% expecting a stronger APAC ex-Japan economy (highest since August), and net 54% a stronger Japan economy in the next 12 months. The lone exception: China, bucking the trend with more participants in favor of a weakening rather than a strengthening in the year ahead for the first time since the launch of this periodical 17 months ago. Yet, return expectations have softened Surprisingly, in an apparent disconnect, the return expectations for the region have mellowed down a notch, likely due to the underwhelming YTD performance of index heavyweight China. The moderation was driven by a dip in both the profits outlook as well as the undervaluation perception of the regional equity markets. Acute apathy on China The China equity market, in particular, failed to obtain the nod of approval from survey participants, with the majority willing to sit out/avoid at the moment, including 15% who are looking to cut risk on any bounces. Tellingly, China allocation struck a new low as investors brace for a structural de-rating, given their belief that the propensity among Chinese households to preserve cash rather than spend/invest is here to stay. Roaring bulls in Japan: from value trap to value bias The optimism on Japan remains unscathed, as FMS spells out even brighter prospects for returns than before. 29% of participants expect double-digit returns in the next 12 months with scant bids for a peak anytime soon. It is, by far, the favorite market in the region, as cited by net 56% of ...
