Overview

• By end-July, 71% of the 45 large EM funds Nomura tracked were underweight India, up from 60% a month earlier.
• Forty-one of 45 funds cut India exposure in July, taking the trimmed-mean relative allocation down about 1 percentage point versus June.
• Allocations increased to Hong Kong by roughly 0.8 percentage points, to China by 0.7 points, and to South Korea by 0.4 points, reflecting a rotation toward North Asia.
• India is now the largest underweight in EM portfolios at about 2.9 percentage points versus the MSCI EM benchmark; more managers are overweight Korea (60%), and the share underweight Hong Kong/China fell to 53% from 71%.
• A Bank of America survey shows India sliding from managers’ top Asian pick to least preferred in three months, while overseas investors have sold $12.7 billion of Indian stocks year to date and the MSCI India Index has lagged EM by nearly 15 percentage points.