Investor sentiment has sharply shifted across Asia, with fund managers preparing for an impending economic downturn both regionally and globally, according to Bank of America’s (BofA) April Asia Fund Manager Survey.

Pessimism Reaches Post-COVID High

Conducted from April 4 to 10, the survey reveals:

• 89% of respondents anticipate slower economic growth in Asia.

• 82% foresee a global slowdown in the coming months.

These responses signal the most negative sentiment since the pandemic, marking two consecutive months of declining outlook.

Falling Profit and Return Expectations

Confidence in corporate earnings is diminishing:

• 78% expect a deteriorating profit cycle in Asia.

• Many feel that current consensus earnings projections remain overly optimistic.

• Return expectations turned negative for the first time since October 2022, with analysts highlighting a lack of supportive valuations at current market levels.

China’s Outlook Shifts Once More

After some optimism previously, sentiment towards China has taken a downturn:

• 58% of managers now predict an economic weakening in China over the next 12 months.

• Despite ongoing monetary easing, structural pessimism around China has reached a survey peak.

• Capital preservation remains a top priority for Chinese households, diluting any near-term recovery optimism.

Japan and India: Caution Prevails Yet Found Favor

While Japan continues to be the most favored market, concerns are rising:

• 26% of respondents expect Japan’s economy to weaken.

• Return expectations and market enthusiasm for Japan have reached record lows.

India has regained its position as the second most favored market, confirming its appeal despite global uncertainties.

Thailand and China rank as the least preferred markets among surveyed investors.

Key Market Factors to Monitor

BofA analysts emphasize that investors are focusing on critical factors such as:

• Currency fluctuations and foreign exchange volatility

• Policy changes from the Bank of Japan

• Corporate governance changes in Asia-Pacific markets

Data Sources for Enhanced Insights

To keep tabs on economic indicators and sentiment trends:

• Economics Calendar API: Track macroeconomic data that influences investor sentiment and monetary policy directions.

• Key Metrics API (TTM): Examine fundamentals and valuation trends across Asian equities.

Concluding Thoughts

As fund managers remain cautious, the message is clear: macro headwinds, earnings uncertainty, and geopolitical factors weigh heavily on Asia’s investment landscape. While Japan and India show relative resilience, overall sentiment is gravitating towards capital preservation rather than risk-taking.