AI Trade Keeps Global Investors Away from India, HSBC Strategist Explains

• Global investors are favoring Taiwan and South Korea due to strong AI-linked demand, diverting funds from India.
• Companies like TSMC, Hynix, and Samsung benefit from data center construction in the US, driving demand for AI components.
• HSBC had upgraded India to "overweight" expecting a rotation back, but investors are reluctant to leave high-return AI markets.
• India's outlook has slightly improved with moderating valuations and early earnings upgrades, but currency and near-term earnings growth remain concerns.
• Key risks for India include rupee volatility, sustainability of earnings recovery, and margin pressure from increased competition.

Why It Matters: AI-driven demand in East Asia is currently overshadowing India for global investors, despite India's improving outlook.