Reduction in Indian Equity Exposure
Christopher Wood, the global head of equity strategy at Jefferies, has reduced his exposure to Indian equities by one percentage point as of October 2, 2024. Despite this adjustment, Wood remains ‘overweight’ on Indian markets, even amidst ongoing volatility in domestic equities.
Increase in Chinese Equity Allocation
In contrast, Wood has raised his allocation to Chinese equities by two percentage points. While he has previously held an ‘underweight’ stance on China, this move aims to capitalize on potential gains from a recent rally in Chinese markets. He has also lowered his positions in Australia and Malaysia by 50 basis points each.
Portfolio Adjustments Amid Market Volatility
In his latest update, Wood noted that the end of the quarter and significant market fluctuations necessitate adjustments within the Asia Pacific ex-Japan relative-return portfolio. Despite these changes, he continues to hold an ‘overweight’ position in both Australia and Malaysia.
Geopolitical Tensions: A Key Risk for Global Markets
Wood highlighted rising geopolitical tensions in the Middle East as a major concern for global equity markets. The ongoing conflict between Iran and Israel poses risks that could impact global markets, including India. Wood emphasized that any escalation in the situation could lead to significant downturns in markets worldwide, which may not yet be fully priced in.
Market Reactions to Geopolitical Developments
The announcement comes during a period of heightened global market risk due to escalating geopolitical tensions. This has driven up crude oil prices, bond yields, and safe-haven assets, while global stock indices have experienced slight declines.
Chinese Market Rally Continues
Chinese shares resumed trading after a holiday on October 2, overcoming cautious market sentiment and extending their stimulus-driven rally, supported by attractive valuations. In contrast, the Indian market observed a holiday in honor of Gandhi Jayanti.
Labor Market Data and Economic Outlook
In economic news, job openings unexpectedly increased in August following two consecutive months of decline. However, hiring remained subdued, signaling a slowing labor market. Private payroll data is expected to be released later today, providing further insight into the employment situation.
