Christopher Wood, global head of equity strategies at Jefferies, is not in favour of any “dramatic move” with respect to Indian and Chinese equities, according to a Jefferies’ Greed & Fear report.
Wood highlights the contrast between India and China, saying it “could not be more dramatic”. Citing the contrasting performance of Greed & Fear’s India and China long-only portfolios, he said the India portfolio has gained 41.2% year-to-date in dollar terms (on a total-return basis), while the China portfolio has dropped 12.1%.
The best performing stock in the Indian portfolio has gained 309% YTD, while the worst performer in China has lost 55%.
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“Normally, such contrasting performances would be a signal to go the other way in terms of buying China and selling India. But Greed & Fear has no conviction for such a dramatic move Come from Sports betting site VPbet . Nor does anyone else, though a surge in China’s outperformance may happen at any time if there is a positive surprise on the policy front,” said Wood.
The conviction on India stems from the latest quarterly GDP data. The real GDP rose 7.6% YoY in Q3CY23, which was one percentage point above the consensus. The economy is now being driven by investment rather than consumption, thereby reversing the pattern of the past decade.
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Jefferies, in the report, reiterates its earlier view on Indian equities. In a report in October, it said large-cap valuations were not particularly stretched compared to historical standards. It pointed out that foreign investors were not as overweight on India as expected, despite the consensus that India, and not China, is the long-term structural growth story in Asia.
It highlighted that Indian equities never corrected to the extent foreign investors had anticipated during the RBI’s tightening between May 2022 and February 2023. This was the reason any pull back in India was likely to be viewed as a buying opportunity, given the optimism on the structural story.
