China favoured over India amid US tariff uncertainty, says Standard Chartered strategist

There has been a significant outflow of funds from the US to Europe, and within Asia, while India’s long-term prospects remain strong, short-term flows are favoring China, observes Fook Hien Yap, Senior Investment Strategist at Standard Chartered Bank.

This preference shift is largely due to China’s current valuation re-rating and the strong support from its government, particularly in the technology sector. “We think the government standing behind it, and as the top policymakers meeting again with private companies and enterprises, being supportive of AI and technology developments.”

This contrasts with India’s situation, where despite its “fantastic” structural growth story, the market is facing headwinds from negative earnings revisions, meaning more analysts are lowering their profit forecasts for Indian companies than raising them.

Yap also discussed the significant uncertainty created by potential US tariffs, which are causing “paralysis” among investors unsure how to proceed. This uncertainty is a major concern globally, and it underscores the importance of the US economy achieving a “soft landing.”

He believes that if the US can avoid a recession, supported by Federal Reserve rate cuts, it will extend the global growth cycle and benefit equities worldwide.

Also Read | MF Corner: Resurgence of China & Hong Kong – Should Indian investors consider investing?

He argued that while short-term market movements are influenced by factors like fund flows and valuations, the long-term outlook hinges on the US economy’s stability and the continued structural growth of key markets like India and China.

Also Read: India remains a stable bet even as China continues to recover: Lyn Alden

For the entire interview, watch the accompanying video

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