If Trump wins, India may outperform within down mkts: UBS

With the US elections outcome around the corner, market apprehensions are on the rise. Dow futures were down about 650 points in early morning trade.In a conversation with CNBC-TV18, Geoffrey Dennis, UBS, said it is still unclear what the outcome of the US polls will be. The market has seen a sharp decline in the futures. Whether the US polls will have an impact on India, Dennis says it is being predicted that Donald Trump's win will see more downside in the market. The emerging markets will suffer significantly. Bonds will rise, yields will fall. He said India will be on the defensive side along with other EMs. India may be an outperformer within the down markets. On the impact of US polls on equities, Teresa Barger of Cartica Capital said it could be bad for the equities. People were predicitng an immediate drop in S&P by 5 percent if Trump wins and a rise of 1 1/2 to 2 percent if Hillary wins. On Mexican peso she said, some projections go as high as 25 to the dollar.Below is the verbatim transcript of Geoffrey Dennis' interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18.Latha: What is it looking like because the Dow futures are down 300 points?Dennis: Yes, obviously it is still very unclear what the outcome will be. I don’t want to comment in great detail about the election results as they come out which certainly the market has seen the sharp declines in the futures, has seen the sharp decline in Mexican Peso which within emerging is obviously the people have been playing this. That is because there is at least four very large battleground states, Florida, Ohio, North Carolina and Virginia where Donald Trump is currently in the lead. It is still very early days to know that is right but market is cleverer than me and the market has decided that there is a possibility here of a Trump Presidency.Latha: If there were a Trump victory, would you sell-off emerging markets for a country like India? Teresa Barger was telling us that a 5 percent fall in Dow was expected if it is a Trump victory. How much might a country like India fall solely on the Trump news?Dennis: First of all, we value consistently that a Trump victory gives you more downside and the Clinton victory would give you upside. That is what the market is beginning to think about on this evening as these results come in.You get a major risk-off move in terms of equity markets. I don’t want to put a number on it but I would expect emerging markets to suffer significantly -- it would depend on what the policies would be. One of that would be that bonds would rise and yields would fall, that helps the cost of capital argument within emerging markets. I would consider India along with one-two other Asian markets to be some of the more defensive markets within an emerging market asset classes that could come under severe pressure. So, we are going to go down with Trump Presidency without any questions and at least initially, India maybe an outperformer within those down markets.For full discussion, watch accompanying videos...