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

CLSA thinks this could lead to offshore investors pulling back from China, especially those who invested after the initial PBOC stimulus in September.

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.

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.

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.

CLSA returns to a benchmark on China and 20% overweight on India, anticipating the return of a Trump trade war against Beijing.

"India appears as among the least exposed of regional markets to Trump's adverse trade policy. Moreover, so long as energy prices remain stable, India may offer a relative oasis of FX stability in an era of a strengthening US dollar" it said.

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 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.