What happened suddenly that brokerage firm CLSA changed its view on Indian markets. While CLSA was bullish on Chinese markets till October, it has now changed its strategy and expects a strong comeback of FIIs in Indian markets.
Brokerage firm CLSA says we take a U-turn from our China outlook released in October. The report mentions three continuous shocks in the Chinese economy.
Have made a strategic change in your approach. While on one hand CLSA believes that the Indian market will see strong inflows in the future, on the other hand China’s economic outlook looks weak.
1) Trade Tension: Export is the real wheel of China’s growth. With the introduction of Trump 2.0, there are full chances of a trade war starting.
2) Relief Package: The stimulus package issued by China is clearly being seen as a measure to remove the risks arising in the economy. But its capacity seems limited.
3) Monetary policy easing put on hold: High US interest rates and inflation fears have left little room for both the Federal Reserve and China’s central bank to cut interest rates.
CLSA says that factors like deflation, falling property prices, rising unemployment among youth, wavering domestic confidence of families, stagnant real estate investment etc. have increased the problems facing policymakers in China.
CLSA increases its exposure in India by 20%
On the contrary, the brokerage says that the impact of Trump’s trade policies on Indian markets will be very minimal. Additionally, as long as energy prices remain stable, India is also looking forward to foreign exchange (FX) stability in this era of US dollar strength. Now CLSA has positioned India as 20% overweight in its portfolio, which is a more positive news for the country.
CLSA’s move to reduce its exposure to China comes as global investors consider the risks and benefits of investing in emerging markets, particularly Asia. With India’s economy in a strong position, CLSA’s move symbolizes the country’s continued resilience and a bet on long-term growth, even amid global uncertainties.
Disclaimer: This information is for informational purposes only and should not be construed as investment advice. It is recommended to consult a financial advisor before making investment decisions.