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Last Updated : Sep 27, 2016 11:28 AM IST | Source: CNBC-TV18

EMs may drag a bit; positive on India: JP Morgan AMC

Ian Hui, Global Market Strategist, JPMorgan Asset Management talking about the impact of US Presidential pre-elections debate on global market, said if Hillary Clinton comes into power then markets may take it more favourably than if Donald Trump comes into power.

Ian Hui, Global Market Strategist, JPMorgan Asset Management talking about the impact of US Presidential pre-elections debate on the global market, said if Hillary Clinton comes into power then markets may take it more favourably than if Donald Trump comes into power because she is expected to carry forward US President Barack Obama’s policies.

The statements per se are unlikely to impact global markets majorly. The debate took place at Hofstra University, New York.

When asked if he thinks emerging markets are likely to see protracted corrections going forward, he said it all depends on the different data points coming out of China – whether China will stabilise, the outlook on commodity prices, and outcome of the OPEC meeting to decide on production freeze, plus the lack of unconventional surprise by the Bank of Japan – all this could drag the markets a little lower.

However, amongst the EMs, the house has a positive outlook on India.

Below is the verbatim transcript of Ian Hui's interview to Latha Venkatesh and Anuj Singhal on CNBC-TV18.

Latha: How serious is this? Going after China and Mexico and other countries which have taken away US jobs, is the global trade about to shrink if Donald Trump wins?

A: I would say -- keeping in mind -- that even if Trump does make some very controversial statements on how he sees various number of other countries and how they affect America, he still has to remember, he still has to get any more controversial laws passed between the Lower House and the Upper House in the US parliament.

I do think it is still fairly hard to say. We do know there has been always worries and a bit of rhetoric from a lot of US politicians about the situation between China, the situation in Mexico with various immigrants coming across. We have never seen any huge or destabilising measures yet. We do know that there has always been a bit of controversy over what China does.

Latha: Are you saying this is just a political pre-election rhetoric and there is no worry or is there a worry that there can be some impact on trade? Some attacks if the republicans were to win?

A: I think there will be some worry but it is fairly minor.

Anuj: While the debate was going on, we saw quite a bit of recovery in the US futures and in Asian markets as well. What would you attribute that to?

A: I do think we have seen quite a bit of volatility. We have seen a bit of sell off at the start yesterday in Asia. People might think it has been overdone after the slight disappointments in the Central Bank announcements we saw last week but I think a lot of people will be hang on to see what will be the result of the debate today. Will there be sort of any concrete swing in sentiment or sort of the consumer opinion in the US to see if there is more a favourable or unfavourable result of the US election happening in November.

Latha: What would your definition of favourable be from a market point of view? Will a swing towards Trump be treated as favourable for the markets?

A: I think we have to keep in mind that elections don’t tend to drive markets but market do tend to drive elections but for this one, with the controversy of the candidates, as if we maintain a status quo or if Hilary Clinton gets elected as a sort of continuation of Obama's policies, I do think that the market will take that a bit more favourably than Trump coming into power. There will be a bit more uncertainty if Trump does come in, a bit more volatility as people don’t quite know what to expect if he does become the President of the United States.

Anuj: There have been other issues as well which the market is dealing with now. For the last three-four days we have seen a bit of a decline in emerging market fund flows, we have seen markets of course decline post that Fed announcement, do you get a sense that we are in for a slightly protracted period of correction for emerging markets?

A: I won't think so. I think it would depend on some of the numbers that are going to come out, we do see China continue to stabilise, we have seen a bit of talk that is number of areas in China are once again going to clamp down on the housing markets. It will depend on commodity prices as well. We see various Organization of the Petroleum Exporting Countries (OPEC) come to agreement that there was some production freeze possibility still looking like a possibility but still quite a lot of uncertainty there. I think along with everything else, some of the Central Bank measures are lack of real concrete or like unconventional surprise for the market with the Fed and Bank of Japan (BoJ) last week probably dragging markets down slightly.

Latha: Are you buying India or any of the emerging markets (EMs) at now these slightly lower levels or will you wait for even lower levels?

A: I do think that emerging markets are still looking quite positive at the moment. India is still one of the more positive. We do know that the earnings story in India still hasn’t quite turned around but other measures such as the less reliance on global trend, the more reliance on the consumer, the better mix of industries in India still make that look a lot more favourable compared to some other emerging markets right now.

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First Published on Sep 27, 2016 08:50 am
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