BlackRock says it's time to buy China stocks and trim India exposure: Report

BlackRock is trimming its investments in Indian equities and becoming more optimistic on China on attractive valuations amid expectations that policy hurdles will ease next year, according to a Bloomberg report.

“Valuations are key right now,” Belinda Boa, head of active investments for Asia Pacific at the world’s biggest asset manager, said at a briefing, reported Bloomberg. “Because of the outperformance we’ve seen in India this year, on a relative basis, we are starting to take profits and become more positive on Chinese growth stocks," she said.

BlackRock has rejigged its Asia-focused portfolios to have more neutral positions on China, up from underweight, and narrowed its underweight call on Internet services companies, the report further added.
 
BlackRock's comments come at a time when the sentiment around Indian equity markets has soured due to broker downgrades and concerns about tightening liquidity.

However, Sensex snapped four sessions of losses on Tuesday, as metals and energy stocks marked a sharp recovery. The blue-chip NSE Nifty 50 index ended up 0.5 per cent at 17,503.35 and the benchmark S&P BSE Sensex rose 0.34 per cent to 58,664.33, after falling as much as 1.15 and 1.28 per cent earlier in the session. The indexes lost nearly 4 per cent each over the last four sessions.

Moreover, the Reserve Bank of India's (RBI) economists recently stated that valuations of Indian equities seem stretched by most conventional yardsticks, such as price-to-earnings multiples and yield differentials with benchmark bonds, but the trend among promoters to steadily raise ownership in listed companies reflects the confidence they have in their businesses.

In their latest report on the state of the economy, the central bank economists also said that monetary and credit conditions are conducive for a durable economic recovery.

"The spectacular gains have raised concerns over overstretched valuations with a number of global financial service firms turning cautious on Indian equities," said the RBI's latest monthly bulletin authored by its economists.