Asia Fund Manager Survey Tech is still king, but defensives are rising

Asia Fund Manager Survey Tech is still king, but defensives are rising

BofA August Asia Fund Manager Survey 18 August 2026

Spotlight: Despite tech retaining the top positions among investors’ preferences, FMS Equity Strategy investors have clearly shifted toward a more defensive stance (Exhibit 21). 59% are Asia Pacific hedging AI downside risk by rotating into value, cyclical, and defensive sectors, more than double the level seen in July. Nearly two-thirds of investors require clearer evidence of AI monetization before increasing exposure to AI-related stocks (Exhibit 19).

Macro: Nearly 60% expect the next BoJ rate hike to occur as early as next month (Exhibit 7), in line with our economist’s expectation (see note). Most investors see USD/JPY at 165 as the likely trigger for intervention by Japan authorities (Exhibit 8). Research Analysts

Valuations: Investor optimism toward Asia ex-Japan equities rose to 89th percentile in Kaspar Lam >> Research Analyst August. Investors also increasingly view Asia ex-Japan equities as undervalued. Merrill Lynch (Hong Kong) Themes: FMS views on the semis cycle weakened sharply in Aug (Exhibit 15). Power & Winnie Wu >> Energy remain the most favored segments of the AI value chain (Exhibit 17). Research Analyst Merrill Lynch (Hong Kong) Positioning: For Asia ex-Japan, Investors rotated out of cyclicals and technology into

defensives sectors (Exhibit 22) such as Utilities, Banks, Staples, Healthcare, and Amish Shah, CFA >> Research Analyst Telecoms, while industrials and tech hardware recorded the sharpest declines. In Japan, BofAS India investor exposure remains heavily concentrated in Banks and Semiconductors, with

Banks rising to a historical high (Exhibit 23). Strategist

Masashi Akutsu >> Exhibit 1: Investors shifted toward value, cyclicals, and defensive sectors to hedge AI downside risk Strategist How are you currently hedging downside risk in the AI trade over the next 6-12 months? BofAS Japan

41% Rotate into value / cyclicals 20% FMS: Fund Manager Survey 18% APAC: Asia Pacific Rotate into defensive sectors 8% 9% Aug-26 No hedge - remain overweight AI 28% Jul-26 Notes to readers A total of 203 panelists with $581bn 9% Rotate within AI value chain AUM participated in the August survey. 16% 5% 180 participants with $525bn AUM Short / underweight crowded AI beneficiaries 12% responded to the Global FMS questions and 105 participants with $272bn AUM 0% 10% 20% 30% 40% 50% responded to the Regional FMS Source: BofA Asia Fund Manager Survey. Notes: Votes for ‘Don't know’ are not shown above. questions. BofA GLOBAL RESEARCH Survey period: Aug 7 – 13, 2026

How to join the FMS panel Investors/clients are encouraged to sign up to participate in the Survey. Trading ideas and investment strategies discussed herein may give rise to significant risk and are not suitable for all investors. Investors should have experience in relevant markets and the financial This can be done by contacting Michael resources to absorb any losses arising from applying these ideas or strategies. Hartnett or your BofA sales >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analyst representative. under the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that take Participants in the survey receive the responsibility for the information herein in particular jurisdictions. BofA Securities does and seeks to do business with issuers covered in its research full set of results for the months in reports. As a result, investors should be aware that the firm may have a conflict of which they participate. interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 16 to 18.

Macro Exhibit 2: Recent CPI and jobs data have eased concerns over Fed rate hikes, yet growth expectations have weakened… Net % expecting a stronger Global / APAC ex-Japan economy

Asia Pacific ex-Japan Global Source: BofA Global & Asia Fund Manager Survey BofA GLOBAL RESEARCH

Exhibit 3: …inflation expectations further ease in August…