JPMorgan’s Rajiv Batra Forecasts Five Rate Cuts By U.S. Fed, Starting From June


Is there a correlation out there that China, because it’s trading at the valuations that it is seeing (will see) some bounce naturally and that leads to the Asia Pacific market at large seeing an uptick? Are Indian markets expensive from an optical perspective or are they expensive an actual perspective on the Nifty? Can they participate in this front-end uptick for Asia Pacific in 2024?

Rajiv Batra: Last September, we argued that Asian equities were dropping and would soon see the upside… MSCI Asia X Japan surpassed 640 levels by the year end, and it was up from lows of 580 last October. Now, with this benign U.S. setup, markets are likely to keep trading higher and may absorb any minor risk event. In this context, there are a lot of laggards in the Asia equity space that may start to catch up in the scenario.

Now, there are many signs that it had been happening since last week or December, like price action in Asia is broadening out but it isn’t yet extremely elevated. The momentum factor has started to underperform and also looks quite crowded. So when we look at the market’s level, the most prominent lagardes are still China, Hong Kong and Thailand. They are yet to catch up and discount the Goldilocks scenario which other equities are discounting globally.

In the case of India, I will say that right now, the stronger growth trajectory in India is helping justify their higher valuation for the country, which is a big question mark most of the investors are putting. Remember, India is one such market which has consistently outperformed emerging markets for the last two decades. The reason is very simple. Growth is a scarce commodity globally, and particularly in today’s environment, foreign investors do take into account relative growth. That is your growth versus the peers over there, not just the valuation to take a call and most importantly, foreign investors are growth tourists. They invest in the destinations that offer them premium growth compared to either developed market or other regions. India is offering that growth and literally year after year and we are deserving this premium and valuation.

So we do expect a period where markets stay sidelined because of lack of catalysts, but it will be a kind of a small blip, because there are long-term trends emerging where investor interest is rising. There’s a virtuous cycle of deepening and broadening liquidity. There is rising fundamental coverage and analysis along with the capital issuance and most importantly, India is one such market where we are seeing long-only investors have the highest bets of benchmark holding…





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2024-02-13 01:33:32

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