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HSBC is overweight on Chinese market due to cheap valuations there. He is also bullish on sectors like healthcare, software and private banks.
Herald Van Der Linde, head of equity strategy, Asia-Pacific, HSBC believes most economists are overweight on India as there are more uncertainties in other larger markets like China and Korea. He also feels the emerging markets that are more sensitive to foreign flows will see faster depreciation.
In an interview to CNBC-TV18, Linde says he is overweight on China at the moment due to cheap valuations. "The average company in China is trading at about half the price of the multiple in India," he adds.
Meanwhile, he will review the overweight stance on Indian market and is bullish on healthcare, software and private banks. He feels valuations look reasonable for IT sector, the outlook for growth is normal and they also benefit from the weakness in the currency.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: How mutual funds are positioned across the Asian region and on a relative basis, in which market exposure seems to be declining the most at this point?
A: If you look at sector and country regions, across the region how mutual funds are positioned - there is a particular trend, which has been going on, but is changing gradually. People have focused on markets where growth is visible. Philippines is the fastest growing economy at the moment and until a couple of months ago mutual funds were maximum overweight on the Philippines levels, we haven’t seen in the last five-six years.
India fits in there as well. We have seen people being maximum overweight on India as well. That is partially a reflection of the uncertainties in other larger markets like China and Korea. Korea due to the political issues earlier this year and China for the domestic growth issues.
If you are a large fund where else do you go in the region? Some of the other markets are too small, so India is then a place they need to hide in.
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