Christopher Wood of CLSA says that India remains the best long-term bull story among EMs and is not much concerned about political standoff in India. India is suffering due to the collateral damage and may see more pain. He says that the RBI has managed the domestic credit situation very well and says that the RBI tightening may be very well over, and they may start cutting rates. On the rupee, Woods says that it may pullback in near-term and rise 3-4% p.a. in long-term. He would avoid Indian IT, and rather prefer domestic themes.
On the real estate sector, he was of the opinion that prices may fall in short-term, though the long-term view remains bullish. They have switched from Unitech to Bharti in recommendation, due to a better sector outlook.
On the global scenarion, Woods said that Asia may retest recent highs, if Fed eases rates. He said that they would not invest all money in Asian EMs in near-term. He sees a material slowdown in US economy over next few months and more pain in the US housing market, with a high single-digit fall in prices. He believes that US is clearly going into recession, and all risks are on the downside.
The US markets have been expecting that Fed Governor Ben Bernanke will cut rates in his next Fed policy. Woods says that the Fed may cut rates in Sepyember, but not if the US markets rally. But a Fed rate cut is imminent within the next 2-3 months. A slower US consumption may prompt a Fed rate cut.
Woods says that global markets have to negotiate more headwinds in 2007. He believes that multi-strategy hedge funds in India will liquidate further and the next asset bubble could be very much seen in Asia/Emerging markets. In the worst case: Asia ex-Japan could correct by up to 33% from peak. He says that only incremental decoupling has been seen in Asian EMs till now.
On the real estate sector, he was of the opinion that prices may fall in short-term, though the long-term view remains bullish. They have switched from Unitech to Bharti in recommendation, due to a better sector outlook.
On the global scenarion, Woods said that Asia may retest recent highs, if Fed eases rates. He said that they would not invest all money in Asian EMs in near-term. He sees a material slowdown in US economy over next few months and more pain in the US housing market, with a high single-digit fall in prices. He believes that US is clearly going into recession, and all risks are on the downside.
The US markets have been expecting that Fed Governor Ben Bernanke will cut rates in his next Fed policy. Woods says that the Fed may cut rates in Sepyember, but not if the US markets rally. But a Fed rate cut is imminent within the next 2-3 months. A slower US consumption may prompt a Fed rate cut.
Woods says that global markets have to negotiate more headwinds in 2007. He believes that multi-strategy hedge funds in India will liquidate further and the next asset bubble could be very much seen in Asia/Emerging markets. In the worst case: Asia ex-Japan could correct by up to 33% from peak. He says that only incremental decoupling has been seen in Asian EMs till now.
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