Fund managers have expressed rising optimism for the Asia-Pacific economy in spite of inflation concerns, according to the Merrill Lynch Fund Manager Survey released on Tuesday.
Forty-two percent of the respondents expect the region's economy to get stronger in the next 12 months, from 32 percent last month. Although inflation is forecast to edge higher, 84 percent said they believe monetary policy to be about right, the report said.
Amid rising equity volatility, investors have increased their preferences for the relatively safer developed Asian markets of Hong Kong and Singapore.
The report added that the ASEAN markets also performed well this month. Malaysia, Philippines and Thailand are becoming increasingly attractive as investors shift exposure away from the cyclical markets of North Asia, namely Taiwan and China, it said.
This is evident in the polls, with none of the respondents saying they would overweight Taiwan over the next 12 months, down from 12 percent who said so last month and 15 percent in January.
In stark contrast, 18 percent said they would overweight Hong Kong, up from 12 percent last month and 4 percent in January.
Respondents were more bullish about the banking, retail and technology sectors, while they tend to underweight the media, telecommunications, utilities and auto sectors, the report showed.