Rajiv Batra of JPMorgan picks India as the firm’s top pick among investment destinations in Asia. Taiwan, Mexico, and the UAE follow in his pecking order.
In an interaction with CNBC-TV18 on Wednesday, December 4, Batra said that JPMorgan recently dropped its barbell approach and turned more risk-on. A barbell strategy involves investing in a mix of high-risk and no-risk assets, while ignoring the mildly risky assets altogether.
Batra also said that JPMorgan closed bearish calls on the midcaps and smallcaps segment. He attributed the recent fall in the equity markets to both, a de-rating of the Price-to-Earnings multiples and a cut to Earnings per Share (EPS) estimates as well.
MSCI India, ex-financials delivered negative earnings growth in the most recent quarter on a year-on-year basis, according to Batra, who also added that the deceleration in earnings growth is concerning investors, as it was earnings resilience that was driving the market higher earlier.
Among other areas of concerns for investors, include the arrival of Donald Trump as US President, which, according to them, is negative for Emerging Markets. “A stronger dollar, high interest rates overall, trade tariffs uncertainty braces for an anemic growth environment for Emerging Markets,” Batra said.
For the upcoming year, Batra expects returns to be front-ended as festive and wedding season will aid earnings recovery. He also sees some value emerging in select auto and utility stocks, as value was missing from the market for a long time.
The Nifty 50 index is up for the third straight day on Wednesday and has recovered over 1,000 points from the November 22 low of 23,359.
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