The shift towards financial stocks reflects a more defensive approach among investors facing persistent inflation, geopolitical uncertainty and growing concerns over crowded AI-related positions. The MSCI Asia Pacific Financials Index gained 8.6% in July, its strongest monthly outperformance against the region’s technology stocks on record. US financial stocks have also repeatedly reached record highs this year as investors have broadened their exposure beyond technology and AI. Hong Kong financial stocks are also drawing increased interest as enthusiasm for technology shares cools. DBS Group Holdings and Oversea-Chinese Banking Corp have seen their shares reach record levels as fee income from wealth management expands.