homemarket NewsChina seeing big consumption revival which augurs well for discretionary space: Manishi Raychaudhuri
China seeing big consumption revival which augurs well for discretionary space: Manishi Raychaudhuri
As the world continues to emerge from the COVID-19 pandemic and economies begin to reopen, China is emerging as a major player in the revival of consumption.
As the world continues to emerge from the COVID-19 pandemic and economies begin to reopen, China is emerging as a major player in the revival of consumption. According to Manishi Raychaudhuri, Asian Equity Strategist, Equity Cash Asia Pacific at BNP Paribas, the reopening of the Chinese economy is boosting sentiments for the consumer discretionary space.
He said, “The reopening of China is not only a big sentiment booster as far as Chinese consumption goes. It will lead even the consumption in the in the consumer discretionary space, the numbers turning better, and also earnings estimates reviving in e-commerce, internet and consumer discretionary.”
However, despite recent underperformance, the relative valuation of India remains at a premium. Raychaudhuri also predicts that the US Federal Reserve will raise interest rates by 75 basis points in the first quarter of 2023, which may lead to a continued appreciation of the dollar against emerging market currencies.
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“Our base case expectation is another 75 basis points of rate increase over the first quarter of 2023. And one must also put that together with QT - quantitative tightening that the Fed is engaging in, then September, they accelerated the pace of QT. And we think that for the foreseeable time horizon over the next couple of quarters, that is likely to continue,” he said.
Overall, the reopening theme presents both opportunities and challenges for investors. While the revival of consumption in China is a positive development, the potential rate hike and appreciation of the dollar could impact emerging markets. As such, investors should carefully consider their strategies in the current economic environment.
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First Published: Jan 9, 2023 4:25 PM IST
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