Jefferies' Strategic Shift: From China to India in Asia Pacific Portfolio

In a significant move, global investment bank Jefferies has announced a strategic reallocation within its Asia Pacific ex-Japan relative-return portfolio, increasing its weightage in India while reducing its exposure to China. This decision reflects broader market trends and geopolitical considerations that are influencing investment strategies across the globe.

Understanding the Shift

Jefferies' decision to adjust its portfolio weightage is driven by several factors, including economic growth prospects, geopolitical tensions, and market dynamics. The reallocation signifies a growing confidence in India's economic trajectory and a cautious stance towards China's regulatory environment and economic challenges.

Economic Growth Prospects

India's GDP growth is projected to outpace China's in the coming years. According to the International Monetary Fund (IMF), India's GDP is expected to grow by 6.5% in 2025, compared to China's 4.8%. This robust growth outlook is underpinned by strong domestic demand, policy reforms, and a favorable demographic profile.

Geopolitical Considerations

Geopolitical tensions, particularly between the United States and China, have led to increased scrutiny of Chinese investments. In contrast, India has been positioning itself as a stable and attractive destination for foreign investment, with initiatives like "Make in India" and the Production Linked Incentive (PLI) scheme enhancing its appeal.

Market Dynamics

India's stock market has been performing well, with the Nifty 50 index gaining 12% year-to-date as of December 2025. In comparison, China's Shanghai Composite Index has seen a more modest increase of 5% over the same period. The Indian market's resilience amidst global volatility has been a key factor in attracting foreign investment.

Portfolio Reallocation: By the Numbers

Jefferies' portfolio reallocation involves a significant shift in weightage:

This reallocation reflects a 33% increase in India's weightage and a 16.7% reduction in China's weightage within the portfolio.

Implications for Investors

For investors, Jefferies' strategic shift underscores the importance of adapting to changing market conditions and geopolitical landscapes. The increased allocation to India suggests a bullish outlook on its economic prospects and a strategic hedge against potential risks associated with Chinese investments.

• Diversification: Investors should consider diversifying their portfolios to include more Indian equities, given the positive growth outlook.
• Risk Management: The reduction in Chinese exposure highlights the need for careful risk assessment in regions with heightened regulatory and geopolitical risks.
• Long-term Growth: India's demographic dividend and structural reforms present long-term growth opportunities for investors.

Market Outlook

The strategic shift by Jefferies is likely to influence market sentiment, with increased interest in Indian equities and cautious optimism towards China. As global investors reassess their portfolios, we may see a broader trend of reallocating assets towards markets with strong growth potential and stable political environments.

The market may see increased volatility in Chinese equities, while Indian markets could experience upward momentum.