**Market Brief: Jefferies Cuts India Weight Amid North Asian AI Rally** **Strategy Update** Jefferies strategist Christopher Wood has further trimmed India’s exposure in his Asia Pacific ex-Japan portfolio. The move reflects a tactical pivot as global capital aggressively chases the "AI picks and shovels" trade, favoring semiconductor-heavy markets in North Asia over India’s consumption-driven economy. **Key Portfolio Changes** * **India:** Recommended weight cut by **2 percentage points** to **15%**. * **China:** Reduced by **1 percentage point**. * **South Korea:** Raised by **2 percentage points** to **15%**. * **Taiwan:** Increased by **1 percentage point** to **16%**. **The AI Squeeze** The relentless rally in tech stocks has skewed the MSCI Emerging Markets (EM) index. As semiconductor giants surge, the combined benchmark weight of Taiwan (**21.3%**) and Korea (**15.4%**) has expanded significantly. Consequently, India’s weight in the index has compressed to **13.1%** — its lowest level since March 2023. **Capital Flow Reversal** The shift is not just theoretical. Recent data signals a rotation of funds, with Foreign Portfolio Investors (FPIs) pulling approximately **$3.9 billion** from Indian equities by December 2025. These outflows are largely being redirected toward AI-centric markets in the U.S., Taiwan, and South Korea, leaving India underperforming its regional peers despite strong domestic GDP projections of **7–8%** for FY26. **Strategic Outlook** Wood characterizes the current environment as "AI fever" but maintains a structural overweight stance on India (relative to a benchmark of 13.2%). He notes that while the AI trade is currently dominant, a future unwind of this "overinvestment" could act as the catalyst for funds to rotate back into Indian markets. [Jefferies' Chris Wood decodes Rupee fall](https://www.youtube.com/watch?v=ec1MDiRO2E4) This video provides additional context on Christopher Wood's broader views on the Indian market and currency, helping to explain the macroeconomic factors influencing his recent portfolio adjustments. http://googleusercontent.com/youtube_content/0