Bank of America September Asia Fund Manager Survey: Sentiment towards China improves, exposure increases, but 70% still view it as a "structural market"

Interest among Asian fund managers in the Chinese market is quietly picking up.

According to Wind Trader, on September 16th, Bank of America released the latest September Asia Fund Manager Survey (FMS), showing clear signs of sentiment recovery among investors toward the Chinese market.

Data shows that only 9% of surveyed fund managers expect the Chinese economy to weaken over the next 12 months, a significant improvement from 59% in April. Expectations for China’s growth have risen to a six-month high. Compared to August, the proportion “fully invested” in the Chinese market surged from 3% in August to 13% in September. The wait-and-see camp has also shrunk markedly, with the proportion dropping from 23% to 13%.

Meanwhile, “anti-involution” has become the most favored investment theme in China, far surpassing artificial intelligence/semiconductors and cyclical stocks in popularity. Although short-term sentiment has improved, 70% of respondents still consider the Chinese stock market to be a “structural market.” The intention to “reduce positions on rallies” has strengthened, with the proportion rising sharply from 7% to 17%.

This survey covers 101 fund managers with a total of $207 billion under management, conducted from September 5th to 11th.

Sentiment in the Chinese market warms, but there is also profit-taking mentality

The survey shows that fund managers’ views on the Chinese economy have clearly improved. The net proportion expecting economic weakening is 9%, a sharp contrast to the net bearish reading of 59% in April, and the best level in six months.

At the same time, investors’ actions are becoming more proactive. Compared to August, the proportion of surveyed fund managers in September “fully exposed” to the Chinese market soared from 3% to 13%. The wait-and-see camp also shrank markedly, with those “waiting for more credible signs of easing to add positions” dropping from 23% to 13%.

However, the proportion “looking to reduce exposure” rose sharply from 7% to 17%. Those “looking for opportunities elsewhere” increased from 3% to 9%.

According to Bank of America, “Given that China has been one of the best-performing markets so far this year, these fund managers believe there will be profit-taking and a need to wait patiently before deploying new funds.”

This change is driven by strong expectations for subsequent policy support. The survey shows that 83% of fund managers expect China’s monetary policy to become more accommodative over the next 12 months. Although this percentage has fallen from a record high in April, it remains at a high level.

However, this short-term optimism has not entirely dispelled concerns about “structural issues.”

The survey found that as many as 70% of respondents still believe that the Chinese stock market is experiencing a process of “structural de-rating.” The report also noted that despite the improved sentiment, fund managers remain net underweight on Chinese stocks in their overall Asia-Pacific allocations (-26%), only ahead of Thailand and Indonesia.

“Anti-involution” is the hottest theme, with AI and cyclical stocks close behind

For specific investment themes, fund managers' preferences are also very clear. The survey indicates that “anti-involution” became the most popular investment theme with a 52% selection rate, far ahead. Artificial intelligence/semiconductors and cyclical stocks tied for second, each favored by 22% of respondents.

In contrast, themes such as real estate, leisure travel, and stock buybacks/dividends attracted little attention, each with a selection rate of 0%. This reflects that investors are currently more focused on areas that benefit from changes in consumption patterns and technological self-reliance, while remaining cautious on traditional sectors.

Household savings intent remains high, slight increase in asset allocation

The survey also looked at Chinese household savings inclination. Data shows that 61% of respondents believe households will prioritize putting funds into saving accounts, up from 53% in August.

However, the proportion who believe households will buy assets such as stocks, bonds, or real estate rose slightly from 23% to 26%. According to Bank of America, Chinese households’ risk-averse sentiment has slightly declined, and incremental savings may gradually be allocated to investments.

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