Jeffries Trims Korea, Taiwan Exposure, Pushes India Allocation Higher

In a notable portfolio realignment, Jeffries has lowered its weighting for South Korea and Taiwan while boosting its stake in India within the Asia‑Pacific Relative‑Return Portfolio. The Indian target has been lifted from 12 percent to 14 percent, a two‑point increase that places the market in the fund’s overweight tier.

The adjustments for Korea and Taiwan amount to a reduction of roughly one percentage point each, leaving the Korean exposure at 18 percent and the Taiwanese exposure at 24 percent. Both economies are now categorized as underweight, a shift driven by the recent softness in AI‑centric equities.

The move contrasts with Jeffries’ early‑2026 positioning, when a surge in AI hardware shares—particularly memory chips, foundry output and semiconductor equipment—had justified higher allocations to the two East Asian markets. The current decline in AI‑related stock performance has led the firm to reverse that stance.

Christopher Wood, the global head of equity strategy at Jeffries, explained that investors are adopting a more guarded approach to the next wave of AI investment, despite the fact that leading cloud and internet companies are still planning sizable capital expenditures. Forecasts suggest that Microsoft, Amazon, Alphabet and Meta together may allocate about $1.04 trillion to AI‑related projects in 2027, even as credit spreads and CDS premiums have risen, hinting at tighter financing conditions.

Since the peak in June, memory‑chip equities have slipped approximately 40 percent, and the China AI Semiconductor Top‑10 Index has fallen to half of its mid‑year high. While many emerging markets have felt the pressure of a broad sell‑off, India’s limited exposure to memory and semiconductor equipment production is seen as a defensive advantage.

A separate research note projects India’s Nifty 50 index could reach 28,000 by the close of 2027, supported by strong corporate earnings, low oil prices and a potential slowdown in global AI cap‑ex. Jeffries’ latest allocation changes underscore the firm’s belief that India offers a relatively resilient investment opportunity amid an uncertain AI spending landscape.