Expect global markets to continue to be weak: Port Shelter

The global markets have been subdued over the last couple of sessions. In an interview to CNBC-TV18, Richard Harris, chief executive at Port Shelter Investment Management says, the markets will continue to be weak.

According to him, the markets will continue to spike down perhaps, until the end of the quarter. “Looking further out though, I am not so bearish. I would be more positive on equities. But at this stage, I would probably be looking to buy big stocks, big titans and pick them up, when the market is weak,” he adds. Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video. Q: How do you see the situation in Europe now? Does it have the potential to enable risk-off trade in the global markets? A: The second shoe is dropping. We saw the first shoe, which was whole European debt crises, come to our head last year. Interestingly enough I thought some pretty good news over the weekend was the IMF deal, USD 400 billion come together to try and support world markets. That combined with the European money is quite a lot of firepower now. That was the good news. But the second shoe to drop ofcourse is the fact that we now have austerity in many countries which is as a result of the fact that countries have to reduce their spending, they have to reduce their debt. That of course is having a knock-on effect with consumers and therefore a knock-on effect on the market. Q: Admittedly that fire power is now there. But as the second shoe drops, we are now seeing a lot of European countries questioning the political setup altogether, Netherlands has done that. If Sarkozy were to lose elections, we may again start to see France questioning the fundamentals of the European pact and this is France absolutely core European as it gets. Do we get to that brinkmanship that we saw last March, does it get as bad as that? A: I certainly think we got some brinkmanship going. After all, it wouldn't be politics without that. It shouldn't be too much of a surprise to see ourselves in this situation, after all we saw Britain not even come to the table at the end of last year. One or two countries are saying the same thing. Now, we have got the people themselves questioning it. But at the end of the day, the money is there, the political imperative of people in office would come to fore, they might be as free to say what they want. There is absolutely no way that Turkeys are going away for Christmas, there is no way that I think most of the European countries are going to come out of this pact now. It is too late. There will be a change of government, there will be a change of action, but I think the policies will still hold. Q: What assets would you bet on in the next month or so? A: We are going to continue to see weakness in the market because there is enough bad news around to do that. The markets will continue to spike down perhaps, until the end of the quarter. Looking further out though, I am not so bearish. Looking further on, I would be more positive on equities. But at this stage, I would probably be looking to buy big stocks, big titans and pick them up, when the market is weak.