Amid the rising volatility in the domestic equities, Christopher Wood, global head of equity strategy at Jefferies, has cut exposure to Indian equities by one percentage point on October 2. However, the seasoned investors remain ‘overweight’ on the Indian markets.
On the other hand, Wood has increased the weight of China by two percentage points. However, he has been 'underweight' on China lately. The move comes in to mitigate the position anticipating to make better from the Chinese rally. However, he has cut the weights of Australia and Malaysia by 50 basis points (bps) each.
"with the end of the quarter, and following one of the most violent counter-trend rallies in China GREED and fear has ever seen, some adjustments will be made in the Asia Pacific ex-Japan relative-return portfolio," wrote Wood. He continues to remain 'overweight' in both Australia and Malaysia.
Wood also cited the risk of geopolitical tension in the Middle-East in his latest note, which he sees as the biggest global equity markets. Wood also believes that the turmoil between Iran and Israel is not yet fully discounted by them. "In case of an escalation of the crisis, all global markets, including India, will be hit badly, which they are not yet prepared for" he said.
This comes on a day when a risk-off mood gripped global markets as geopolitical tensions have escalated in the Middle East. The latest round of turmoil on a geopolitical front has pushed crude oil, bond yields and haven assets higher, while global stock were seen tumbling slightly.
Chinese shares, which returned from a day's holiday on Tuesday, overcame cautious risk sentiment to extend the stimulus-driven rally amid attractive valuations. On the other hand, the Indian market observed a holiday on Wednesday, October 2, on the account of Gandhi Jayanti.
Iran said early on Wednesday that its missile attack on Israel was finished barring further provocation, although Israel and the US promised retaliation. On the economic front, Job openings unexpectedly increased in August after two straight monthly decreases, but hiring was soft and consistent with a slowing labour market. Private payrolls data is due later on Wednesday.