“In terms of the areas that we’re underweight or cautious, that would be in IT, increasingly. What’s interesting is over the last six months, we’ve seen very strong profit recovery in the sector of about 25 percent in terms of profit revisions, but the sector has actually gone up more than that. It’s gone up close to 35 percent,” Swan said at BlackRock’s 2017 Asia Mid-Year Investment Outlook.

“There’s a high probability we’re going to see companies looking to scale capacity in general. And it’s normally the supply side that becomes more damaging for the sector,” he added.

Despite that, BlackRock still has holdings in tech companies such as Samsung Electronics, Tencent and Alibaba Group. But Swan said his team is also increasing investments in the “old economies sector” such as financials and energy.

Overall in Asia, the asset manager is optimistic on China, India and Indonesia in both equities and credit. Belinda Boa, CIO of emerging markets and fundamental active equity, said the reflationary story is very much alive in the region despite the recent pull back seen in many economic data.

China, for instance, posted uneven PMI readings for its services and manufacturing sectors, while India’s growth decelerated in the first quarter.

“We believe that the implied (global) growth rate will be sustained. This reflation trend will continue to dominate as the main macro theme for markets. We think that both emerging markets and Europe will continue to look attractive going forward,” Boa said.

She added that political risks in Europe have diminished compared to the beginning of the year, but security risks surrounding North Korea remained.

In terms of the impact of external developments on Asia, BlackRock’s head of Asian credit Neeraj Seth said guidance by the European Central Bank is a larger factor than the United Kingdom elections this Thursday.

“Overall, the election this Thursday is getting a lot closer than say a month ago when it was called, but I don’t think the U.K. election results have any significant impact on our markets either way… The markets have started to insulate a lot of those. If anything, I’d say the more important event in the current week is going to be the ECB meeting and what we get out of it in terms of the forward guidance,” he said.