India replaced Indonesia as Asia’s least-favored stock market in Bank of America’s latest fund manager survey, as investors pointed to limited AI exposure and concerns about growth, reforms, and valuations.

In the August 7 to August 13 survey of 98 panelists managing US$272 billion, 32% were net underweight India, compared with 27% for Indonesia.

Taiwan and Japan remained the most preferred markets.

Indian stocks have lost 8% this year, making them Asia’s second-worst-performing market.

This came despite more than US$4 billion of foreign inflows this quarter and an 18% rise in the latest reported earnings of companies in the NSE Nifty 50 index.

Context for the reform concerns includes India’s slow privatization, incomplete labor-code rollout, difficult land acquisition, and localization and tariff policies that can hinder supply-chain integration.

That has fed disappointment that India has not turned “China plus one” demand into greater exposure to semiconductors and AI hardware, even as the 2026-27 budget is backing AI data centers and Semiconductor Mission 2.0.

Indonesia’s standing improved in the survey as net underweight positioning fell from 32% in July to 27% in August.

The shift came alongside a rebound of more than 20% in the Jakarta Composite Index from a June low.

🔗 Source: Bloomberg