look news india
Mumbai: China’s sluggish economic growth is forcing it to give a huge package of stimulus-relief, and on the other hand, Donald Trump’s victory in the US has made the markets nervous including China over possible measures and policies including stringent tariffs, Which have now become negative. News from Hong Kong, ‘Avoid China’ and ‘Back to India’ reports of global giant funds have once again created a stir in China’s Shanghai Stock Market.
Notably, global broking giant CLS in its Global Equity report has reversed its initial strategic shift from Indian equities to Chinese stocks and decided to increase allocation to India while reducing China exposure. In its report titled ‘Pouncing Tiger, Prevaricating Dragon’, CLS attributed the move to the challenges faced by Chinese markets following Donald Trump’s victory in the US election.
The broking house said Trump 2.0 has heralded an escalation in the trade war, as exports have become the biggest contributor to China’s growth. CLS said it had been skeptical about the possibility of a decline in China’s equity-share markets from the beginning, although it had earlier in October pledged to strategically shift some of its overexposure to India to China.
The broking house reduced the weightage for India from 20 per cent to 10 per cent and increased the allocation for China from the benchmark to five per cent. The report said that now the broking house has decided to reverse that trade. This reversal comes at a time when India is facing a steady decline in foreign investor inflows. Due to weak earnings in the second quarter and rising inflation, foreign institutions have sold Rs 1.14 lakh crore from Indian stock markets since October.
CLS said many global investors were waiting for such a correction to address their underexposure to Indian stocks. On the other hand, China’s economic struggles include deflationary pressures, sluggish real estate investment, and massive youth unemployment. China may face the possibility of higher tariffs under the Trump administration amid an uncertain domestic situation. The negative factors which include deflation, falling asset prices, rising unemployment among youth, declining self-confidence, increase in real retail sales.
With this report of CLSA and the fall in the markets of Hong Kong, there has been a big fall in the Shanghai stock market. Today-Friday, the CSI 300 index of China’s Shanghai Stock Market fell by 70.79 points or 1.75 percent to 3968.83. Japan’s Nikkei index rose 107 points. European markets remained marginally soft. In the evening futures trade in the US stock markets, Dow Jones index fell by 160 points and Nasdaq index fell by 186 points.