Need earnings growth to keep Indian stock market going: Mark Matthews
"Geopolitical events do not seem to be causing any impact on the world economy. In fact, there is potential for some deceleration in geopolitical problems over the next 12 months," says Mark Matthews, Julius Baer.
The disconcerting factor we were discussing is when it comes to the quarterly earnings back home, is there some sort of a sense of a slowdown that could be prolonged due to macro concerns in India?
Mark Matthews: I do not know if it is macro concerns, but you are absolutely right. I think the major issue facing India now is the deceleration in earnings growth. And the Nifty will still clock around 10% earnings growth this year, but the most recent quarter, it is looking very flattish.
And yes, I do not think this is really driven by the economy, but I mean, the economy looks fine to me, but you do need earnings growth to keep the Indian stock market going, like a stock market anywhere in the world. I mean, in the absence of that, it looks very expensive.
So, if you have to let us say choose between US stocks, global bonds, gold or Bitcoin, which way would you lean for next 12 months?
Mark Matthews: I guess I would lean toward global stocks because I do think that the Chinese market will be heading higher over the next 12 months and there are still good stories in other major economies of the world. The emerging markets do have quite strong GDP growth in front of them for the next few years, the highest relative to the US in 20 years, I might add. And global stocks, of course, includes the US.
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