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Investing.com-- Long-only funds increased their exposure to Japan in October, buying about $12.1 billion worth of shares while reducing positions across other major regions, Bank of America Global Research said.
The shift marked one of the strongest single-month allocations into Japan this year and contrasted sharply with broad selling elsewhere.
Funds sold equities in Emerging Markets, Asia, the United States and Europe, with outflows of $26.2 billion, $23.8 billion, $16.8 billion and $8.8 billion respectively. The data covered more than 6,200 long-only funds managing $36 trillion in equities.
Within Japan, telecom and banking stocks saw the largest inflows, at $2.9 billion and $2.1 billion respectively. SoftBank Group was the most bought name, with net purchases of $2.9 billion, while UniCharm was the biggest selling at $400 million.
Position in Softbank likely came amid optimism over the long-term prospects of the conglomerate’s artificial intelligence ambitions.
Globally, the strongest net buying was in banks and software stocks, up $9.9 billion and $9.0 billion. The largest selling was concentrated in semiconductors and industrials, both down more than $17 billion.
In the U.S., Citigroup was the top purchase, with inflows of $6.7 billion, while funds offloaded Meta Platforms, selling $9.8 billion worth of shares. In Europe, investors added exposure to CaixaBank and reduced Novo Nordisk. In Asia ex-Japan, managers bought Guotai Haitong but sold shares of TSMC.
TSMC in particular was sold off amid a broader rout in chipmaking stocks, while crowded positive positioning in the stock also spurred profit-taking.
BofA said rotation from active to passive strategies continued in both the U.S. and Europe, extending a multi-year trend.
BofA highlighted positioning extremes using its “Crowded Positives” and “Under-owned Negatives” screens, which combine ownership levels, benchmark weighting and momentum factors. Stocks currently classified as crowded winners included TSMC, Tencent, Broadcom and ASML, while under-owned laggards included names such as UPS, Mercedes-Benz and Trade Desk.
The bank said crowded stocks with positive catalysts historically outperformed under-owned stocks with negative momentum