With global markets in a selloff mode on fears of a prolonged world economic slowdown due to the coronavirus outbreak, Christopher Wood, global head of equity strategy at Jefferies in his weekly GREED & fear note stated that he has hiked China's stake in his Asia Pacific ex-Japan relative-return portfolio post the recent market correction.
As per Wood, China has started to outperform world equities since the start of February in a hope that the worst may be over for Coronavirus in the country even as cases outside China surged.
"The MSCI China Index has risen by 4.1 percent in US dollar terms since the beginning of February, while the MSCI AC World Index is down 4 percent over the same period. This market action also raises the hope, at least, that investors will look through the likely horrible first-quarter Chinese data," Wood Wood said in the note.
Woods also pared stakes in Indian and Korean markets to fund the rise in stake China markets.
According to the report, in India, the Narendra Modi–led government, seems to be prioritising the social agenda over economic issues to a far greater extent than NDA-1.
“And the main difference between the two governments is that BJP President Amit Shah has now entered the executive branch as Home Minister. Shah and Modi go back decades in terms of Gujarat politics and their political affiliation with the Bharatiya Janata Party (BJP). Until proven otherwise, investors should assume they share the same agenda of saving, or at least preserving, the culture of the Hindu nation,” the report noted.
Meanwhile, the recent macro data has also not been up to the mark, which is another reason to cut India exposure. The December quarter GDP released last Friday, still shows no signs of a cyclical uptick, though nominal GDP growth rising from a 10-year low of 6.4 percent YoY in September quarter to 7.7 percent in December quarter is positive, he said.
First Published: Mar 6, 2020 1:00 PM IST
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