UBS has revised the equity strategy of its emerging markets, which has moved to a more protective and domestic-oriented approach amid growing trade uncertainties. Global brokerage has extended India’s position from ‘underweight’ to ‘neutral’, while maintaining its favorable stance towards China within the emerging markets.
The steps are part of a comprehensive strategic change in favor of markets characterized by stable income, domestic revenue currents and defensive features. The UBS notes displays many positive features during India – domestic focus, strong income even during crisis, and benefits from low oil prices – these factors are insufficient to warrant the condition of a ‘overweight’.
The firm strategically moved away from exposed investments to markets dominated by local mobility. Their evaluation framework now prioritizes the markets that displays per share stability, minimum risk for global trade disruption, and positive analyst approaches. Within this structure, China and Indonesia present more attractive investment sites.
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Advanced Indian status reflects the recognition of its fundamental powers, although UBS is measured in its perspective. Brokerage maintains a better position of China on India supported by four major views:
1. Corporate performance is weak
UBS expresses concern about India’s corporate income landscape. The analysis indicates weak stock fundamentals, keeping in mind the inequality between positive macroeconomic discussions and real income performance, highlighting a significant deduction in earnings per share (EPS).
2. Uncertainty in improvement agenda
Despite India’s political stability and strong domestic tale, UBS “indicates uncertainty about” whether the government’s focus is soon returning to development/investment “. This suggests that additional clarity may be necessary before the re -evaluation of the market.
3. Supply chain and trade ideas
UBS holds reservation about India’s status in global supply chain reorganization. The organization monitors India’s trade discussions, especially about agricultural subsidies and retail areas. These aspects can potentially form policy complications or delays, possibly affect market performance.
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4. Anxiety
The evaluation aspect presents important challenges. The UBS indicates that India’s business level “is much higher than history”, the risk vs. reduces its appeal when considering the reward, especially compared to regional options. Nations such as China and Indonesia offer potential benefits from more defensive status, low evaluation and excitement measures or foreign investment returns.
(Disclaimer: Recommendations and views on stock markets and other asset classes given by experts are their own. These opinions do not represent the views of Times of India)
