Bank Of America Suggests Contrarian Asia Plays

• Bank of America’s recent client data shows that funds are readjusting positioning in Asia
• Funds are currently underweight Asian and Australian financials and overweight Indian financials
• Bank of America believes that the China-driven selloff has created targeted buying opportunities

As fears over China continue to grow, the most recent data from Bank of America shows that large funds reduced their exposure to Asia even further last month. As share prices continue to plummet, Analyst Nigel Tupper sees value opportunities opening up in Asia for contrarian traders.

The trends
While looking at the most recent data from large funds, Tupper identified several investing trends. First, funds have been eager to reduce exposure to China and industrials.

In the Asian tech space, Tupper notes that funds reduced their overweight positions in Taiwan Semiconductor Manufacturing Company Ltd TSM and reduced their underweight position in Samsung Electronics Co Ltd SSNLF.

Financials
Bank of America’s data shows that funds are underweight Australian financials, such as Westpac Banking Corp WBK, and Chinese financials. On the other hand, the funds are overweight Indian financials such as HDFC Bank Ltd HDB and ICICI Bank Ltd IBN.

Potential trades
According to Tupper, the selloff in Chinese and Australian names has created potential buying opportunities. “Our BoAML fundamental analysts have some recommendations that differ meaningfully from investor positioning,” he explains.

Bank of America believes that the selloff in Australian and Chinese financials is overdone, and sees Westpac as a Buy at current levels.

In addition, while investors have been selling India tech companies, Tupper sees a buying opportunity in Infosys Ltd INFY.

Disclosure: the author holds no position in the stocks mentioned.