2 weeks Ago
Jonathan Schiessl , Deputy Chief Investment Officer, Westminster Asset Management , says if the export-oriented companies have domestic facilities in the US, that is a different story. But with some of the threats Trump was making earlier during the campaign, any business that is exporting equipment or even services into the US has to be having a long hard look at their business models. On the other hand, maybe less regulation in certain parts of the US economy will benefit growth.
The US elections, a major event is out of the way. We are seeing that impact on the likely beneficiaries. The manufacturing companies are seeing a sharp run-up, the IT pack, the pharma pack, all are seeing good momentum in trade today.
But what is your opinion when you talk about these sectors which are heavily dependent on United States policies? Jonathan Schiessl: The election hopefully will be out of the way in a matter of hours. But the next concern will be what on earth will the policy be? We have heard a lot of talk about potential tariffs, about trying to weaken the dollar but conversely, the dollar has strengthened a bit today. It is all up in the air still.
None of us quite know what policies will be followed. Therefore, some of the moves in some of the sectors are a reflection of the recent selloff as opposed to sudden optimism about the exports to the US or US business. I still think broadly it is up in the air.
We need to gauge what the policy will be to come before we have a better idea about stocks and sectors within the market. Back home we have been discussing how financials is a place that you have lied in the past. But what about consumption as a theme because that is where the debate is on.
Urban consumption seems to be slowing down and rule has not picked up at the level which was expected. Is it the time to buy because there would be that follow up momentum build up which will happen in next year or you will get better opportunities and just stay away for now? Jonathan Schiessl: For anybody looking at the sort of stocks in that sector, medium to longer term, that is a great story with regards to growth within urban and rural India combined. But clearly in the short term, valuations in the sector traditionally have been very punchy, reflecting that great opportunity.
So, if the stocks come off further, that is good news and a potential buying opportunity for investors. But in the short term, there probably will be still a bit more uncertainty around the fact that there might be a better time to buy these stocks, but from a medium to longer term view, if you pick the winner in the consumption space, it looks very attractive. The Street is a bit divided there because manufacturing is one space which is becoming a stronghold for India, but if that entire narrative around exports does play out the way Mr Trump is calling India tariff king, do you think some of these export-oriented companies have something to be worried about? Jonathan Schiessl: Yes, I think so.
Clearly if these companies have domestic facilities in the US, that is a different story. But with some of the threats he was making earlier during the campaign and any business that is exporting equipment or even services into the US has to be having a long hard look at their business models. So, yes, it is certainly a worry.
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So yes, as I said, it is still very uncertain about what exactly is going to be happening. Sales have not been up to the mark for most of the auto players. We have seen a rough ride coming in for some of the players.
No doubt, the festive season has shown a sharp jump when it comes to retail sales. How are you viewing the auto pack because if you look globally, the auto companies have flagged off that they are facing headwinds. Jonathan Schiessl: Globally there is a different story going on.
The Chinese are making headway in the EV space and that is putting a lot of stress on the traditional strength of European OEMs. So, there are certainly problems there. We are going through a transition in the sector related to EV, potentially other hybrids, etc.
The Indian market will be going through that shift as well. Some of the players are more advanced than others in that movement. But the worry for a lot of existing players, both within India and elsewhere, is the impact of Chinese imports.
Turning back to Trump, he is saying come and build factories, we are happy if you do that, but we are not going to let you import cars into the US. So, there is a lot of uncertainty. Clearly, the big players within India have huge market shares.
We will see what happens in the space. We are still quite optimistic on the outlook, certainly from Maruti, but we will have to see going forward. You Might Also Like: Trump victory to reverberate through global economy (You can now subscribe to our ETMarkets WhatsApp channel ).
