Market investor Shankar Sharma believes the recent note by CLSA raising allocation to India while cutting exposure to China is a 'trap' for India's retail investors and domestic institutions, even as brokerage houses remain divided on their stance on Indian equities. He cheekily pointed out the global brokerage firm's association with its Chinese parent, CITIC Securities, framing it within the frequently evoked narrative of a China-related conspiracy.
In a social media post on November 19, Shankar Sharma criticized the euphoria surrounding the CLSA note's reversal of earlier allocation away from India to China, calling it a Chinese-owned 'Trojan Horse'.
"I am convinced that the report of "Buy India" was a trap set by the Cheeni Gormint via their Cheeni broker (in mask of being F2), to trap foolish Indian retail and DIIs. Humko chhadha diya," Sharma wrote on his social media handle on X.
"F2s continued selling, and pehnaoed us their unwanted Desi maal," Shankar Sharma added. An F2 broker typically refers to a brokerage that operates on a "partner" model, acting as intermediaries for a larger, full-service brokerage firm.
Replying to a reader's comment questioning why a China-owned brokerage would come out with a critical note on the country, Shankar Sharma said, "It's a bigger game. Far bigger than our mental and pay grades."
CLSA - originally Credit Lyonnais Securities Asia - is closely associated with the China International Trust and Investment Corporation (CITIC) through ownership. In 2013, CITIC Securities, a subsidiary of China's CITIC Group, had acquired a majority stake in CLSA for $1.25 billion. By 2015, CITIC Securities completed a 100% acquisition of CLSA, integrating the firm into its operations.
CITIC Securities is now China's largest securities company with branches in 13 other countries, and the first one to list on both the Shanghai Stock Exchange and the Hong Kong Stock Exchange. This acquisition of CLSA is aimed at expanding CITIC's global presence, and to diversify its financial services portfolio. CITIC Securities' international business is handled by CITIC CLSA, which focuses on institutional business in major global stock markets.
CLSA has now raised its India allocation to a 20 percent Overweight in November, while cutting exposure to China, in a tactical reversal.
Sharma has been a voice of caution in the current market slowdown. On November 4, his post on X read, “The problem with the Indian stock market is that for the past three years, it was like Rajesh Khanna between '70 & '73: back to back, 14 super hits. Uncontested. Then came a UP ka bhaiya, a classical 4 AM bet & “Namak Haraam” suddenly made it a two horse race. That bhaiya is China.” Read more here.
The benchmark indices Nifty and Sensex has seen a sharp technical correction from all-time highs seen in September, and some market participants are asking the question if the selloff is done here, or there is more to come.
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