Mumbai, November 18 (IANS). Among emerging markets (EMs), India has the “least sensitivity” to US President-elect Donald Trump’s proposed tariffs and higher interest rates, Alexander Redman, chief equity strategist at global brokerage CLSA, said on Monday.
Foreign investors are likely to run out of excuses not to invest further in India, Redman said on “Global Outlook and the India vs China Case” at the ’27th CITIC CLSA India Forum 2024′ here.
“If you believe the world is going to be less favorable to emerging markets and you are ‘underweight’ in India, investors will forgive you for increasing your weighting in India,” Redman said.
CLSA last week raised India’s allocation to 20 per cent ‘overweight’, while reducing exposure to China.
The global brokerage shifted its “strategic allocation” from China to India, citing growing concerns over Beijing’s economy and investor sentiment following the US presidential election.
Redman said that his expectations about China have reduced because Trump’s re-election as the US President and the rise in 10-year US bond yields could pose many challenges for China in the future.
“India is one of those markets where you would be forgiven for having long-term overweight risks,” he said.
In a recent note, Redman highlighted that among emerging markets, India has the least sensitivity to Trump’s proposed tariffs.
“India benefits from relatively low trade exposure to the US and particularly from low and declining levels of foreign equity ownership,” he wrote.
The global brokerage believes “Trump 2.0 signals an escalation in trade war” just as exports become the biggest contributor to China’s growth and India “benefits substantially” if the US and Trade hostilities between China rise again.
“India appears to be the least exposed among regional markets to Trump’s negative trade policies,” the global brokerage said. Additionally, as long as energy prices remain stable, India will be an asset for foreign exchange stability amid a strengthening US dollar. “Could be a good example.”
–IANS
SKT/GKT
