Global markets in ‘melt-up phase’, not bubble, says CLSA’s Laurence Balanco; dismisses dot-com bubble parallels

Dismissing parallels with the dot-com boom, Balanco said the current rally across major indices is being fuelled by sentiment and momentum, but still has “further juice left in the trade.”

Moneycontrol News

October 10, 2025 / 14:41 IST

Wall Street - US Stock Markets

Global equities are in the midst of a “melt-up phase” rather than a speculative bubble, according to Laurence Balanco, technical strategist at CLSA. Dismissing parallels with the dot-com boom, Balanco said the current rally across major indices is being fuelled by sentiment and momentum, but still has “further juice left in the trade.”

A melt-up typically refers to a sharp, sentiment-driven rise in asset prices, often triggered by investors’ fear of missing out rather than by fundamentals. Balanco said that while global benchmarks such as the Nasdaq 100 have been hitting record highs, the underlying trend points to more upside. “Despite the new all-time highs and increased bubble chatter, our base case remains continued market strength,” he said.

Balanco’s analysis comes after a remarkable run in global equities: the S&P 500 has surged about 90 percent since its October 2022 lows, including a 36 percent rise since April this year, while the group of “Magnificent Seven” technology megacaps has gained more than 260 percent since late 2022. The rally, driven by enthusiasm around artificial intelligence, paused on Thursday as US stocks slipped modestly ahead of the third-quarter earnings season.

Also read | Nifty target 26,300: CLSA’s Laurence Balanco eyes new record high

Focus on Asia and commodities

Regionally, CLSA’s strategy is turning increasingly towards Asia. Balanco identified Japan’s Nikkei and Topix indices, Hong Kong’s Hang Seng, Hang Seng China, and Hang Seng Tech, along with China’s CSI 300, as preferred markets. “These indices have unmet upside targets from their recent breakouts and still offer attractive risk-reward opportunities,” the note said.

In the commodities space, Balanco flagged aluminium as the next potential breakout in the base metals complex, saying that prices on the London Metal Exchange (LME) appear poised for a new leg higher.

Indian markets remain structurally bullish

Earlier this week, Balanco reiterated his bullish stance on Indian equities, projecting that the Nifty 50 could reach around 26,300 by December 2025 or early 2026, supported by a weakening US dollar and ongoing global equity momentum. He sees the 24,000-24,300 range as a critical support zone that continues to underpin India’s medium-term trend.

Balanco also expects auto and metal stocks to lead the next leg of the rally, with Bajaj Auto cited as a potential “catch-up” trade. Over the longer term, he maintains a structural target of 37,000-40,000 for the Nifty by 2029-30, reflecting sustained optimism over India’s growth and capital market depth.

Commodities and currency outlook

In his broader macro view, Balanco remains bearish on the US dollar, noting that the Dollar Index’s breakdown below the 99-100 zone marks a “major multi-year top”, with scope for further declines toward the 89-90 area. This, he said, should bolster flows into emerging markets and commodities.