Pimco fund beating 97% of peers cuts Magnificent Seven to bet on Asia

Pimco’s Emmanuel Sharef is making a significant bet on Asian markets, moving US$19 billion in assets away from US Big Tech. This is not just a tactical shift; it reflects a growing conviction that the next phase of the AI boom will benefit Asian equipment suppliers and other sectors. The fund’s underweight position on the Magnificent Seven, driven by concerns over high valuations and AI spending-related debt, directly translates into increased capital flow for Asian companies involved in the AI supply chain, including semiconductor components, cooling equipment, and optical equipment. This investment strategy is anchored in strong earnings growth observed across Asia. The focus on China’s financials and materials stocks, particularly for rare earths, also highlights a nuanced approach to Asian markets beyond pure tech. Sharef’s emphasis on biotech and life sciences, driven by AI’s potential in disease treatment and increased M&A, suggests a broader view of AI’s impact extending into diverse sectors. The key for Asia will be sustaining this profit growth to maintain investor conviction, especially as global economic pressures continue.