No big rally expected in run-up to US election: Mark Mathews

No big rally in stock markets is expected until clarity on the US election emerges, believes Mark Matthews of Bank Julius Baer & Co. The voting for election will begin on November 8. Speaking to CNBC-TV18, Matthews said that there is a possibility of re-counting, too. Even if Hillary Clinton won, there are too many scandals surrounding her and a lot of people will make the job difficult for her.The Republicans could initiate an impeachment process too. Matthews feel that India is relatively a safer bet in the Asian basket. Other Asian markets have been going through political unrest. Below is the verbatim transcript of Mark Matthews’s interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18.Anuj: We are seeing DOW futures now up 200 points. Do you get a sense that the worst is over for global markets or is this one of those dead cat bounces that we keep seeing?A: I don't think we will be able to relax until the final call has been made on US election which should be sometime in our evening on Wednesday but if you recall the 2000 election they had to recount the votes on Florida that persisted several weeks and this election is looking like a close one too. So, I wouldn\\'t put all my faith on the massive stock record rally because we just have to wait and see what the result is.Latha: More importantly let us just speculate on the Clinton victory. In case it is and whether we get to know it on Tuesday, Wednesday or thereafter how will the markets look in the event of a Clinton victory? What kind of a short covering bounce can we see?A: Given that the market went down five percent when the email scandal came out about - was it two weeks ago - I don't see why it couldn't bounce another five percent but the problem is there are a lot of scandals revolving around her and I don't think they will go away. So, a lot of people will be really out to make her job very difficult not only by not cooperating in congress on what she wants to do but it is possible that the Republicans in the house of representatives put forward an impeachment process. They require 50 percent approval which they would get. The senate requires two thirds approval to actually convict and the senate I am guessing is going to be democrat. We will find out of Wednesday. So, any way I am getting a little technical but I don't think is going to be a very smooth presidency.Latha: But the worries for the market is that the trans-pacific agreement would be abrogated, the NAFTA would be abrogated, global trade will shrink and EMs were expected to get the rough end of this stick, that fear goes out, doesn't it?A: I don't know if they really priced a lot of that in otherwise China and India and all these countries would have been down much more. So, the markets were not pricing in that kind of event because actually a president cannot unilaterally cancel a free-trade agreement (FTA). He could have definitely stopped the trans-pacific partnership and whether or not we have the trans-pacific partnership the wheels will continue to turn and the global economy would have been fine with or without it.Sonia: How high is the possibility of the Indian markets resuming its uptrend in the month of December irrespective of who becomes president?A: I don't know if we can say irrespective of who becomes president because India I have always found a funny market in the sense that the economy is so large and so domestically driven and yet the stock market tends to be very beholden to global risk appetite and the irony is because the stock market is very big it attracts a lot of foreign investors who don't put a lot of money in the smaller market like the Thailand or Indonesia or the Philippines because they don't like the illiquidity. So, ironically despite the fact that India's economy is very domestically driven its stock market moves in tandem with the rest of the world.So, I would just say one thing which is that in a lot of countries in Asia now I don't know why but there is some coincidence that politics have gotten worse. You might know about the president in Philippines Rodrigo Duterte but also in Korea there is a scandal revolving around the president there, the King of Thailand passed away a few weeks ago, there is a lot more political uncertainty in Thailand and then there were over a million people fundamentalists demonstrating against the government of Jakarta over the weekend in Indonesia. So, what I am trying to say is that relative to the other countries in Asia India because nothing has really happened bad there is looking quite nice.