AI Slump Revives Asia's Forgotten Trades From China To India

A downturn in AI-linked equities has prompted renewed attention to Asian trades that had fallen out of favor during the AI rally, with the spotlight falling on Chinese and Indian markets. The transmission runs through global risk appetite and capital allocation: when investors rotate out of concentrated AI-driven technology leaders, they tend to reassess markets offering lower valuations and different earnings drivers, shifting flows toward value and domestic-demand stories. China-linked equities, which were previously dismissed for weak growth and regulatory overhang, could draw tactical interest if their relative discount widens, while Indian equities, long priced at a premium on structural growth expectations, face the risk of being judged more expensive as capital seeks cheaper alternatives. The next catalyst to watch is the flow data from foreign institutional investors in both markets, alongside upcoming US technology earnings guidance, which will indicate whether the AI pullback is a sentiment correction or a durable reset in capital spending expectations.

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