CLSA Drops In­di­a­b­ulls Cos, Ba­jaj Fin Gains Heft

The Economic Times - - Markets: Beating Volatility - Our Bureau

Mum­bai: CLSA’s chief strate­gist Chris Wood has re­moved In­di­a­b­ulls Ven­tures and In­di­a­b­ulls Hous­ing Fi­nance from the Asia ex-Japan long only port­fo­lio while in­creas­ing weigh­tage in Ba­jaj Fi­nance by one per­cent­age point. Wood had re­duced weigh­tage on both In­di­a­b­ulls Hous­ing and In­di­a­b­ulls Ven­tures in his note in mid-Novem­ber to make way for the in­vest­ments in pri­vate banks — ICICI Bank and In­dusInd Bank.

Wood’s Asia ex-Japan long only port­fo­lio also in­cludes Re­liance In­dus­tries, HDFC Bank, HDFC, Gruh Fi­nance, Dalmia Bharat, Go­drej Prop­er­ties and Arvind be­sides In­dusInd Bank, ICICI Bank and Ba­jaj Fi­nance. Mean­while, Wood said he re­mains hope­ful that a deal over tar­iffs will be struck be­tween the US and China but it will re­quire US Pres­i­dent Don­ald Trump to part com­pany with the agenda of the na­tional se­cu­rity hawks. Pres­i­dent Trump and China’s Pres­i­dent Xi Jin­ping had reac- hed a truce on trade last week on the side­lines of the G-20 meet­ing.

The 90-day pe­riod agreed by both sides to come up with a deal should be suf­fi­cient to al­low in­vestors to hope for a sat­is­fac­tory con­clu­sion, said Wood. “As­sum­ing Trump does not have a na­tional se­cu­rity agenda, which Greed & Fear (ti­tle of Wood’s weekly note) does, then there is a need for Trump to take a profit on his nearly two-year long ‘beat­ing up on China’ trade. For if he holds on to the po­si­tion for too long, the profit risks turn­ing into a loss,” said Wood. “...the im­po­si­tion of the higher tar­iffs as threat­ened would not only be very neg­a­tive for stock mar­kets but would also be dam­ag­ing to the Amer­i­can as well as Chi­nese economies,” said Wood.

Wood said that there is a risk that the US na­tional se­cu­rity hawks may seize the agenda in the ne­go­ti­a­tions with China and talks break down as a re­sult of their more ag­gres­sive stance.

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