Global Investors Pivot to Indian and Chinese Equities as AI Trade Cools

Investor portfolios are shifting away from artificial intelligence stocks across Asia following the US midterm elections, drawing fresh demand toward Chinese and Indian markets. ## Market Shifts Aberdeen Investments prefers domestic-growth markets like India and Vietnam while backing Chinese technology firms, and Lotus Asset Management holds long Hong Kong equity futures. Allianz Global Investors is exploring healthcare and consumer companies, while Asia previously suffered heavily from market fallout tied to congressional results. Major suppliers like Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing Company faced intense exposure due to massive computing infrastructure spending questions. Rajeev De Mello from Gama Asset Management expects investors to diversify broadly, noting that India and China offer less demanding valuations. India also gains appeal from declining oil prices tied to expectations of an earlier end to the Iran war, alongside its lack of AI exposure. Hao Hong of Lotus Asset Management is shorting oil and petrochemicals while going long on precious metals and Hong Kong equity futures. A Hong Kong gauge tracking mainland companies jumped 5.2% last week, marking its best performance since March 2025. Jason Lui from BNP Paribas SA states global investors view China's onshore market exposure as a portfolio diversifier against heavy AI concentration. LOGOS Asset Management chief investment officer Charlie Hong sold shares in SK Hynix, Samsung Electronics, Intel, and Lumentum Holdings last month to buy Indian tech startups, financial firms, and contract drug makers. India's benchmark Nifty 50 surged 8.6% last week for its best weekly gain since 2021, driven by foreign funds pouring a net $1.9 billion into local shares through Wednesday. SBI-SG Global Securities senior manager Utkarsh Singh fielded client calls from Singapore starting at 6:30 a.m. Friday amid the rush, noting foreign funds are pouring in at record levels for the year. Key benchmarks in India and China had ranked among the world's worst performers earlier this year through October. ## Broader Impacts Beyond major indexes, investors are exploring overlooked regional corners offering value outside the AI boom. Michael Krautzberger and Liam Wash from Allianz Global Investors predict defence and financial stocks could lag while healthcare and consumer staples rise. Dale Nicholls from Fidelity notes rotation signs beyond semiconductor heavyweights in Korea, especially among pension funds toward wellness, K-pop agencies, and cosmetics. ACG Management managing director Hui Ling Loh sees Korean consumer stocks like retailers, cosmetics, and food benefitting from domestic orientation and lower US tariff risks. Rayliant Global Advisors portfolio head Phillip Wool highlights opportunities in Korea and Taiwan beyond popular chip stocks, including LG Electronics for US appliance sales. Easing trade policies also boost confidence in auto makers like Toyota Motor and Hyundai Motor. Manishi Raychaudhuri from Emmer Capital Partners points out that India and China remain the only large liquid markets offering broad non-AI exposure. ## Context Investors frequently reallocate capital between technology growth sectors and defensive or domestic-driven value markets depending on macroeconomic trends and political shifts. Changes in US political leadership often prompt global fund managers to reassess trade policies, supply chain vulnerabilities, and regulatory scrutiny across different industrial sectors. Emerging market economies like India and China offer distinct domestic consumption profiles and large liquid stock exchanges that can absorb massive capital flows during global portfolio rotations away from overheated tech segments.