Asian markets decline after a technology-driven rally on Wall Street failed to ease the selling pressure seen in the bank stocks.
- Jefferies’ Christopher Woods expects a potential for outperformance by India as China’s valuation differential reverts after economy re-opening.
- The valuation differential between India and China has reverted to its traditional mean after the huge 65% outperformance of MSCI China over MSCI India.
- Expect a renewed outperformance by India in an Asian and emerging market context, as the dedicated long-only foreign investors are “Underweight” India.
- Domestic equity mutual fund inflows remained positive.
- Domestic demand story in India certainly remains intact to justify continuing belief in equity market.
- Expect an end to monetary tightening following 290 bps of hikes since April 2022, with the policy repo rate now at 6.5%.
- The challenge in India remains relatively high valuations.
- GREED & fear will remain slightly Overweight India in the Asia Pacific ex-Japan relative-return portfolio.
- In the Asia ex-Japan long-only portfolio, which is long term by nature and less benchmark focused, 39% of the portfolio remains invested in India.
Source: GREED & fear note