In an interview to CNBC-TV18 Mark Matthews, Bank Julius Baer and Co shared his reading and outlook on global markets. He is bullish on Indian equities. He sees 50 percent upside from the current levels in the Indian market in the next 18-24 months on the back of improving economy and earnings growth.
Below is the verbatim transcript of Mark Matthews’ interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: We have got lower Purchasing Managers’ Index (PMI) number coming from China. Is there another growth scare around the corner, Asian markets are dull today?
A: They are down because the energy stocks are down but if you take out the energy stocks, they would be up. There is no growth scare around the corner, in fact the oil price will be tremendous tailwind to economies from Japan to India including China and slightly weaker PMI in China doesn’t concern me. In fact my premise has always been that the slowdown in the economy is what is creating a bull market in Shanghai stocks because it is forcing companies to become better run.
Sonia: How much of an upside do you expect to see in the Indian markets because of this fresh trigger that we have got in the form of falling crude now?
A: I would say 50 percent is the upside you could see in India over the course of the next 18-24 months, in part because of the lower oil price. In fact if you look back on, there are about dozen previous episodes since 1990 when the oil price fell and if you measure it fell a lot like 25 percent or so.
Sonia: Did you say 50 percent or 15 percent?
A: Yes 50. I think it could get about 20 percent increase on the back of the lower oil price and then another 30 percent – this is over the course of the next 18-25 months on the back of improved economy and earnings growth.
Latha: You expect a steady flow of foreign funds. Is it your most attractive market in the emerging market basket or even globally?
A: No. I like China better. I think you can get more upside in China. India was a better market than China this year. India is still going to do well but China, if you look at it it is stripping out the oil stocks today because that’s an exogenous shocks which the world needs to digest but if you stripe that out, China has actually entered into a bull market just recently whereas India has been in a bull market for well over a year now.
Latha: What would you buy in India sectorally?
A: I have always been partial to banks. The banks are heart of any economy including India, so if the economy is doing well the banks would do well and when I look at the matter of leverage in households, its very low compared to most countries in the rest of the world especially with oil price doing what it is doing, if you get lower rates, people are more confident in the economic outlook because of the new government etc that should lead to increased lending.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
