The unravelling of the artificial intelligence (AI) trade after the US midterm elections is forcing investors to rethink their Asia
playbook, reviving demand for out-of-favour Chinese and Indian stocks, and companies poised to benefit from easing
inflation and trade tensions.
Asia has been among the hardest hit by the market fallout from the Democrats’ sweep of US Congress. Many of the region’s biggest stocks are critical suppliers to the global AI buildout, leaving local markets exposed as investors brace for
greater scrutiny of the industry.
“I expect investors to diversify more broadly and reduce their concentration in the AI trade,” said Rajeev De Mello, global macro portfolio manager at Gama Asset Management SA. “This should be supportive of China and other markets where valuations are
less demanding,” he said.
India’s appeal has grown as oil prices fell on expectations of an earlier end to the Iran war. Its lack of AI exposure is also now seen as an advantage.
LOGOS Asset Management’s Charlie Hong said he sold his shares in SK Hynix, Samsung Electronics, Intel and Lumentum Holdings last month and has since boosted his Indian holdings.
India’s benchmark Nifty 50 gained 8.6 per cent last week, registering its best week since 2021, as overseas investors returned in force.
