Speaking to CNBC-TV18 Hans Goetti, Chief Strategist, Middle East & Asia at Banque Internationale À Luxembourg, said that markets will continue to face volatility till the US elections.
Even if Hillary Clinton wins, any upside or rally in equities will depend on a number of factors, he said. Healthcare will come under pressure, as Clinton is in favour of price control, he said, adding that he doesn’t think there is a huge upside potential if she wins. The focus will shift to the US Fed hike in December.
He believes emerging markets offer great opportunity for investors as monetary policies are still orthodox and valuations are attractive.
There will be a further upside in gold, he said.Below is the verbatim transcript of Hans Goetti’s interview to Latha Venkatesh & Ekta Batra.
Latha: All global markets are roiling at the prospect of a potential possible Trump victory. Do you think markets can wring their hands a bit more in the run up to November 8, are we going to see some steep losses?
A: Of course the volatility will increase in the next few days because markets are or were, at least up till now, pricing in a Clinton victory and now with the opinion polls showing that the race is tightening, there is a lot of uncertainty.
We have seen in the case of Brexit, opinion polls can be misleading sometimes. Market positioning can be one way and then when the opposite happens of course you can have a huge sell off. We don’t expect that in this case but at the moment markets are rattled just by the possibility of something happening that they have not priced for right now. So, we are going to see a little bit more volatility up to the election.
Ekta: What is your sense in terms of maybe Hillary becoming President, if that is the case and that does come about, do you think that we could see further upside or across the board rally in terms of equities globally?
A: It will depend whether she gets elected and second, what the shape of Congress will look like. The way things stand right now, the probability is high that the Republicans will retain the House of Representatives but if Hillary wins and as a Democratic sweep off both houses of Congress, that of course is something that market is not pricing in either and that will be a surprise as well and I think it will reflect itself in which sectors are preferred right now.
When Hillary wins usually the healthcare sector tends to come on under pressure because she is in favour of price controls on drugs and so on. However, at the end of the day, if something happens that the market is not positioned for of course you can have a lot of volatility. We don’t think that there is huge upside potential if she wins. If the market expectations are met then we will probably see the focus shifting on the Fed rate hike in December.
For entire interview, watch accompanying video.
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