As global investors reassess their heavy dependence on U.S. equities, two countries are rising as attractive destinations for future capital flows: India and Japan, according to Nomura’s latest analysis.

This shift arises from growing skepticism surrounding U.S. economic superiority, which has attracted nearly $3.3 trillion in foreign investments into American equities since 2010. Foreign investors now control approximately 17.8% of the U.S. equity market, equivalent to $16.5 trillion, a concentration that Nomura believes may not be sustainable.

“If this narrative indeed shifts, significant capital movements may occur,” stated the firm’s Global Head of Macro Research.

India and Japan at the Forefront

Nomura analyzed 46 non-U.S. developed and emerging markets based on 24 metrics grouped into five key pillars:

• Market liquidity

• Financial fundamentals

• Governance and regulation

• Risk stability

• Global economic roles

According to this framework, India topped emerging markets, while Japan led the developed market category. Both countries offer an exceptional combination of market depth and investment opportunities, making them ideal candidates for capital reallocations.

Investors interested in these regions often compare valuation metrics and country-level macro information. Platforms help assess inflation, growth, and interest rate trends that provide essential context.

China: High Potential but High Risk

Interestingly, while China scored the highest overall in Nomura’s analysis, analysts expressed clear caution—highlighting geopolitical risks and transparency issues that make it a high-stakes investment.

“If—and this is a significant if—U.S.-China relations improve significantly, China could see major capital inflows,” the report stated. Until then, India and Japan remain the safer long-term options.

As the narrative around U.S. equity dominance shifts, markets that emphasize governance, stability, and investment scale are becoming prominent. Nomura firmly believes that India and Japan fulfill these criteria.