Quantitative strategists at Bernstein suggest that while the momentum trade previously prevalent in Asian markets has experienced a sharp pullback, the liquidation process may not be complete. They advise investors to reduce their concentrated exposure to the technology and artificial intelligence sectors, shifting towards a more balanced portfolio.

In a report, Bernstein quantitative strategists Rupal Agarwal and Cheng Zhang wrote: "We recommend selectively holding momentum stocks, focusing on high-quality companies and those with sustained earnings momentum improvements, while increasing allocations to low-volatility, high-dividend, and value-oriented assets."

"Adopting a barbell strategy is the most prudent approach in the current volatile market environment."

The strategists believe that the ongoing capital rotation is not only occurring within the technology sector but also includes increasing positions in some long-undervalued opportunities within the Chinese and Indian markets.