Trump 2.0: CLSA Reverses China Shift, Becomes 20% Overweight on India

New Delhi: Amid recent exodus of Foreign Institutional Investors (FIIs) from Indian markets, brokerage firm CLSA has reversed its previous strategy, stating that it 'reversed its tactical allocation in early October, returning to a benchmark on China and 20 percent overweight on India.'

CLSA, in its latest note, observed that ‘misfortune happens in threes’ and stated that India appears to be ‘among least exposed markets’ to negative impact of Trump's tre policies.

"...Investors we met this year have been waiting specifically for such a buying opportunity to dress Indian underexposure. Domestic appetite remains strong, offsetting foreign jitters and valuation, though pricey, is now a little more palatable," CLSA said in its latest note. “ initial reaction was to rent rar than buy rally, ⁠yet we committed funds at start of October by tactically deploying some of our over-exposure on India to China,” CLSA note me by Alexander Redman and Wei Sheng Wan said.

Here are some key observations from CLSA report

• Misfortune can happen in threes. So it has played out for Chinese equities over past week. Trump 2.0 heralds a tre war escalation just as exports become largest contributor to China's growth.
   
• We are anxious that se concerns le to a buyers' strike by offshore investors who built China exposure post initial PBOC (People's Bank of China) stimulus in September.
   
• India has seen strong net foreign selling since October, while investors we met this year have been waiting especially for such a buying opportunity to dress Indian underexposure.
   
• Domestic appetite remains strong, offsetting foreign jitters and valuation, though pricey, is a little more palatable.