In just over a week since Donald Trump won the US Presidency, Hong Kong-based brokerage firm CLSA raised its India allocation to a 20 per cent overweight, while cutting exposure to China. This is seen as a tactical reversal from its early October update when it went ‘overweight’ on China following Beijing’s first stimulus on September 24.

Read why has CLSA reversed its allocation strategy, raising investment in Indian equities while cutting China exposure.

China's recent economic woes, including trade tensions with the US and falling property prices, will likely continue to weigh on the Chinese equity market, it believes. In contrast, India is seen as a more attractive investment destination due to its strong economic growth and relatively low exposure to trade risks, CLSA said in a note.

CLSA reverses its investment shift from India to China, citing economic concerns in China, trade tensions, and rising U.S. yields. It increases India exposure, despite risks like market issuance surge.

CLSA has reversed earlier allocation, increasing India and cutting China, even as India faces sustained foreign investor outflows. It said several global investors have been waiting for a correction to re-enter the Indian markets.

Global brokerage firm CLSA has reversed its early tactical shift from Indian equities to Chinese stocks, and has decided to raise India allocation while cutting exposure to China.

While brokerage firms have said the foreign portfolio investors’ (FPIs) selling in India was primarily driven by the need to shift fund flows to China, some experts believe it was a play on US equities.

With Trumps win to US election 2024, higher yields and inflation expectations are sapping scope for Fed in rate cuts, and thus Peoples Bank of China (PBOC) is expected to ease its policy stance ahead.

CLSA reversed its shift from Indian to Chinese equities after Trump's re-election raised trade war concerns. The brokerage cited limited gains from China's stimulus and rising US yields, reinstating a 20% overweight on India.

CLSA said it committed funds at the start of October by tactically deploying some of its over exposure on India to China. It has now reversed that trade, Both MSCI China and India have corrected by 10 per cent in US dollar terms over the duration.