India is our biggest overweight in Asia ex-Japan, says Paul Kitney of Daiwa Capital

With regards to the Indian markets, Kitney said, “The RBI has lowered its forecast but it is still 7 percent, which is extremely strong and in the current environment, India is well-placed to be able to provide liquidity because in the current scenario, we are not in an environment where the rupee is under pressure and we are also in an environment where we are seeing significant decline in oil prices which will take pressure off inflation. I think the inflation in India will dip below 3 percent. So we have got real policy rates that are positive around 300 basis points (bps), which is giving plenty of scope, in our opinion, to cut rates further in order to provide liquidity that will go hand-in-hand with macroprudential policy that is necessary for some of these issues in non-bank.”

“We made a call before the beginning of this year, our 2019 India outlook - at the end of November 2018 we told India being the top market in 2019. We are sticking with that. So we see further outperformance. However, we think that by the middle of this year – this has been our roadmap since last November – that focus will be on next year’s growth particularly in the US and most of the developing economies and we see a tough time ahead for developed markets. Emerging markets will try to outperform. Interest rates being cut in the second half of this year in the US should be supportive of outperformance in emerging markets,” Kitney said.