Mumbai: Among the emerging markets (EMs), India has the "least sensitivity" to US President-elect Donald Trump’s proposed tariffs and higher interest rates, global brokerage CLSA's chief equity strategist Alexander Redman said.
Redman, who spoke at the ‘27th CITIC CLSA India Forum 2024’ here this week to discuss the “global outlook and the case for India versus China”, said foreign investors are likely to run out of excuses for not investing further in India.
“If you are considering the world is going to be less friendly to emerging markets and you are ‘underweight’ in India, investors are going to forgive you for increasing weightage in India,” Redman said.
CLSA last week raised India's allocation to a 20 percent 'Overweight', while cutting exposure to China. The global brokerage shifted its "tactical allocation" to India from China, citing growing concerns over Beijing’s economy and investor sentiment after the US presidential election.
According to Redman, he has been disappointed with China on account of the potential headwinds that it faces after Trump returns as US president and the surge in 10-year US yields rising up to 4.5 per cent, the highest since May.
India has the "moat" against Trump's proposed economic and trade policies, given the domestic flows and lower exposure to US investments, the chief equity strategist said. "India is one of the markets where you will be forgiven to have a long-term Overweight exposure," he added.
The global brokerage believes “Trump 2.0 heralds a trade war escalation” just as exports become the largest contributor to China's growth and India benefits from an “appreciable moat” should trade hostilities between the US and China heat up again.
