Nomura said that Asia will likely be the best-performing region in 2023 after global concerns receded due to capital inflows and better growth prospects.

It expects a much better 2023, driven by the reopening and recovery of China and the near end of the Fed’s tightening cycle.

Even Julius Baer managing director Marc Mathews reportedly believes the reopening of the Chinese market has been better than expected.

A recession in the US or Europe in 2023 would mean growing Asia could outperform, Nomura explained.

This points to a challenging first half of 2023 for Asian economies, with the US and Europe in recession, which could lead to further declines in exports, destocking of inventories and weaker-than-consensus growth.

Having said that, once the global dust settles, Nomura believes Asia will outperform the broader market as its better growth prospects and stronger fundamentals attract large capital inflows.

In addition, the global brokerage said China’s cyclical recovery could provide a more favourable outlook for Northeast Asian economies, but it sees India and parts of Southeast Asia as medium-term champions.

“Asian equities (relative to the US) have local catalysts, valuation support and a better fundamental outlook, while investor positioning is light and balance sheets are strong,” Nomura said in its note.

It also highlighted that funds’ allocations to emerging market equities and foreign ownership were near multi-year lows in most markets.

While the first quarter of 2023 could be volatile due to weak US or Chinese data and a late-cycle Fed rate hike, Nomura believes Asian investors can use the volatility as an opportunity to increase exposure.

The brokerage is tactically overweight China and upgraded South Korea to an “overweight” stance. Also, it has upgraded MSCI Hong Kong to “Neutral” but downgraded Indonesia to “Neutral”. On the other hand, Nomura maintains a “Neutral” stance on Thailand and India. It remains underweight in MSCI Singapore and the Philippines.

Meanwhile, Goldman Sachs’ Timothy Moe thinks valuations in China and South Korea are now more attractive. But Moe added that, according to the CNBC-TV18 interview, India will struggle to overtake its global peers by 2023.

However, CNBC-TV18’s interaction with market veteran Sunil Singhania gave a slightly different take. He thinks investors will focus on China to trim positions to allocate to India.