According to the report, Indian equities outperformed the world in dollar returns in the 11-year period between FY02 and FY12 when the country witnessed a private capex cycle.
“Nearly two decades on and India is now in the early stages of another private-sector capex cycle,” said Wood in the newsletter.
China: Rally Overdue
Wood said there is no doubt that China stocks are overdue for a rally. The MSCI China now trades at 8.8 times estimated earnings as against a 10-year average of 11.3 times.
“For those investors who have conviction on particular bottom-up stories, it makes sense to add here since stocks are clearly cheap,” he said.
The newsletter said despite the biggest cut in the benchmark policy rate since 2019, there was a lack of any euphoric market reaction to this latest easing measure.
“The key reason, so far as GREED & Fear is concerned, is that the central government has still not come up with a policy directly to address the issue of uncompleted residential property projects which is the biggest reason, in GREED & Fear’s view, for the ongoing decline in primary property sales which is accelerating the financial squeeze on developers,” said Wood.
“There is no concrete evidence as yet that Chinese policymakers have come up with a decisive policy to break the deflationary mindset and that mindset is reflected in the continuing evidence of a Japanese-style liquidity trap.”
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