worldwide Emerging markets China is witnessing a radical shift in investment flows, with both institutions and individual investors adjusting their allocations away from China and towards markets such as India and Japan, according to a recent report by Franklin Templeton.
In an interview on Monday, Dina Ting, head of global index portfolio management at Franklin Templeton, said that when investors allocate their assets, “they look for areas where they think there is a better opportunity.”
The shift in global investment patterns is detailed in “Previous US investment opportunities portfolio for 2025written by Ting and Markus Wehrer, Director, EMEA ETF Investment Strategy at Franklin Templeton ETFs.
India has positioned itself as a compelling destination for capital flows, driven by its young demographics, developing infrastructure and potential as a new manufacturing hub, according to the report.
The reallocation trend emerges as China faces economic challenges, with the report showing GDP growth moderating after decades of rapid expansion. While the Chinese economy grew by 5.2% in 2023 after abandoning the policy of eliminating Covid-19, the report refers to International Monetary Fund forecasts that show growth slowing to 4.5% by 2025.
The Japanese market has attracted investors through increased shareholder-friendly reforms, with Ting noting that companies are working to increase dividends and buy back shares. In addition, the report highlighted Japan’s growing role in… Semiconductors Central supply chain artificial intelligence Boom.
Franklin Templeton FTSE Japan ETF (FLJP) The company is up 5.9% year to date, Ting said. She added that despite the good performance of Japan’s domestic market, currency effects have prompted investors to consider hedging options, highlighting how the company’s currencies can be hedged. Franklin FTSE Japanese Hedge Fund (FLJH) Achieved stronger returns.
The shift in market preferences has benefited Taiwan, with the report showing that the stock market has a roughly 15% return in US dollars through the end of November of 2024, outperforming the broader MSCI Emerging Markets Index by 7.7%.
The semiconductor industry remains a key driver of Taiwan’s market, with the report highlighting expectations for continued growth in global chip sales powered by AI and 3D technology.
The report finds that while US allocations remain core investments, the breadth of the global recovery and the changing geopolitical landscape make international diversification increasingly important for investors’ portfolios.