Markets pricing in around 125 bps hike in rates from now to 2024: JPMorgan
According to James Sullivan, Managing Director-Asia Pacific Equity Research, JPMorgan, India outperformed China by over 40 percent on year-to-date basis. He says markets with high valuations are at a risk.
As inflation fears rise, the US Federal Reserve is expected to begin tightening monetary policy going forward, said James Sullivan, Managing Director-Asia Pacific Equity Research, JPMorgan, adding that markets are pricing in around 125 basis points of a rate hike from now to 2024.
“If we put that into context, the average size of a rate increase, after recessions over the course of the last 40 years, has been anywhere from 225 to 425 basis points. And so we still do see significant upside relative to market expectations for Fed tightening, particularly for central bank tightening, particularly the United States," said Sullivan in an interview with CNBC-TV18.
According to Sullivan, markets with high valuations are at a risk.
Talking about India, Sullivan said the country outperformed China by over 40 percent on a year-to-date basis. India and Taiwan were outperformers in 2021, he noted.
“If we look at from a relative market performance perspective in Asia, India, along with Taiwan, were the two best big market outperformers in 2021 and the scale of their outperformance relative to China is important. India outperformed China by over 40 percent on a year-to-date basis and so for the potential for that to start to normalize, particularly given the valuation premiums that we are seeing in India are a core part of JPMorgan's markets call for 2022,” he said.
Talking about the developments on the Omicron variant of COVID-19, he said, "Incremental statistics from Omicron have been relatively benign."
Sullivan is overweight on emerging markets and said that rotational trade into China should be tracked closely.
First Published: Dec 10, 2021 11:52 AM IST
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