India and Japan are wasting no time. They are ready to seize the opportunity from economic woes in the US and the weakening dollar. The US economy will no longer be viewed as the sole exception — other countries are now vying for the role of a global leader.

According to analysts at Nomura, India and Japan stand to benefit from the downtrend in the US stock market dominance. Experts highlighted the strong positions of these countries across key investment metrics. "The world used to invest in the economic exceptionalism of the US, but if that narrative shifts, financial flows could sharply reverse," Nomura notes.

Since 2010, foreign investors have bought $3.3 trillion worth of US equities, bringing their total holdings to $16.5 trillion, which represents 17.8% of the US stock market, according to Nomura estimates.

In a recent study, Nomura evaluated 46 non-US developed and emerging markets using 24 metrics across five key areas: market liquidity/efficiency, economic/financial fundamentals, governance and regulation, risk and stability, and global market/economic relevance.

Based on this methodology, the firm concluded that India (among emerging markets) and Japan (among developed markets) are best positioned to benefit if the US outlook deteriorates. "These countries will gain if investors begin to diversify away from the US," Nomura states.

China is the only serious competitor in this regard. If relations between Washington and Beijing get back on track, China "could potentially see an unprecedented inflow of capital," Nomura adds.

However, the key players remain India and Japan, which "possess the most critical characteristics for absorbing large capital flows — namely, depth (liquidity) and breadth (a wide range of investment opportunities)."

These qualities set India and Japan apart from other nations and suggest that they are better prepared to accommodate significant inflows from global investors reallocating away from US markets.