BofA update shows where active managers are putting money
Investing.com-- Bernstein analysts said they were bullish on Asian markets in the second half of 2025, with increased foreign capital inflows, improved earnings, and a more accommodative policy environment to drive gains.
The brokerage said it was bullish on South Korea and India, and was neutral on China.
Bernstein noted that Asia ex-Japan had outpaced U.S. stocks in the first half of 2025, and were likely to do so in the remainder of the year.
South Korea had given the best returns so far in the year, with the KOSPI benchmark trading up over 30%.
Bernstein recommended “doubling down on Korea,” citing still attractive valuations and expectations of an upgrade cycle. Foreign investor inflows are also expected to remain strong despite rising sharply in May and June.
South Korean stocks were on a tear through June after the liberal party won the 2025 presidential election, bringing an end to heightened political turmoil in the country after the ouster of disgraced President Yoon Suk Yeol.
Bernstein also noted attractiveness in Indian equities, although warned that the market was looking expensive again as the Nifty 50 index approached record highs.
But a continued recovery in earnings, coupled with persistent optimism over India’s outsized economic growth, are expected to continue driving local gains.
Bernstein cautious on China, broader Asia mixed
Bernstein noted that Chinese and Hong Kong equities had remained quite resilient this year despite heightened geopolitical and macroeconomic headwinds.
But a neutral stance on China “still makes sense” amid weak macro trends, a lack of major foreign interest, an ongoing earnings downgrade cycle, and no clear signs of policy support, the brokerage said.
On other markets, Bernstein warned that a sharp rally in Taiwanese stocks may be overdone, especially as foreign investor flows appeared to be peaking.
Singapore and Hong Kong still remained attractive, although Bernstein regards the two more as value and high-yield trades.
Among underperforming Asian markets, Bernstein said that Indonesia and Malaysia were showing some signs of inflection in valuations and earnings.
While Asian stocks saw some headwinds in the beginning of the year, especially from U.S. President Donald Trump’s trade tariff agenda, they staged a stellar recovery through the second quarter, bring valuations back to near multi-year highs. Thawing trade tensions between the U.S. and China also aided this recovery, although Trump’s full tariff agenda still remains unclear.