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From a 10-year view, Indian stocks better than US ones: Chris Wood

Wood said the government has the political will to do PSU divestments

ETMarkets.com|
Dec 06, 2019, 12.31 PM IST
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On India, Wood said it make sense to own some oil stocks as a hedge against a potential shock on crude oil prices.
Christopher Wood, one of Asia’s top-ranked market strategists, says depressed profit growth in India provides good opportunity for long-term wealth creation.

Wood, Global Head of Equity Strategy at Jefferies, says from a 10-year perspective, he would prefer to buy into the Indian market more than the US market.

“Corporate profit has peaked in the US,” he said during an interaction with CNBC-TV18, adding that corporate earnings in the US are not as good as they seem.

On India, he said it make sense to own some oil stocks as a hedge against a potential shock on crude oil prices. He also likes life insurance companies and mutual fund players in the Indian equity market.

Wood believes the sharp slowdown in the economy would provide a great opportunity for consolidation to top Indian companies.

On India’s NBFC crisis, Wood said: “My approach to solving the crisis would be to auction off underlying assets. Auctioning off stuck real estate projects will imply writedown of collaterals,” he said.

He said land and labour reforms would be more important for India to attract foreign direct investment (FDI) than lowering of tax rates. “Structural reforms are a big long-term positive, but a short-term shock for India. Foreign investors want to invest here,” he said.


Wood said the government has the political will to do PSU divestments. “I think the timing of BPCL’s divestment is ambitious,” he said.

He backed RBI’s decision to not cut interest rates, which he said is positive for long-term government bonds. “There is a 50: 50 chance for India to become an emerged market from being the emerging market,” he said, adding that he does not expect the nominal GDP to remain this low in India.

About the US markets, Wood said the market needs to get over the Donald Trump impeachment issue in the short term. “Global equities are not too much focused on the US election right now,” he said.

He said the market would be quite happy if Trump is re-elected given he is pro-growth policies.

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