The recent de-escalation of US-China trade tensions following the meeting between Presidents Trump and Xi should harbour a "net positive" environment for Indian equities, according to Manpreet Gill, Chief Investment Officer for Africa, Middle East, and Europe at Standard Chartered.
Speaking to NDTV Profit, Gill explained that while the truce itself offers immediate relief for both the US and China, India's market performance is intrinsically linked to global economic factors, including the US Federal Reserve and dollar strength.
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In the wake of the meeting, US President Trump announced that the US will slash tariffs on China by 10%, among other things. Gill added that the outcome could be positive for Indian markets, potentially leading to more FII inflows.
"What's important is the impact of inflation (in US) and how it creates room for the Fed to cut rates," be said. "If you are talking about FII flows in India and other Asian markets, dollar still plays a very big factor. And lower rates or at least the ability to keep cutting rates will lead to a weaker dollar, thus leading to more inflows in India and other Asian economies."
"It's a positive. Asian equities, including India will benefit and we will see more inflows," he added. Nevertheless, Gill warned that that this positive outlook is "a part of several drivers including the Fed and the dollar, in particular, which need to come together to trigger growth for next year."
Gill went on to offer a favourable outlook for Asian markets at large, with India's positioning as a low-beta market making it an ideal bet for investors. He also urged investors within India to back equities over everything else.
“As a global investor, Asian equities are expected to perform better than the rest of the EM space. If you an investor in India, equities is clearly the better place to be. I think China is going to become the most important question on that relative argument," he concluded.
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