InvestorQ : Why has UBS downgraded investing in India?
Moii Chavate made post

Why has UBS downgraded investing in India?

Tisha Malhotra answered.
11 months ago

In fact, there are two diverse viewpoints. On the one hand, UBS is positive on China and negative on India and Taiwan. On the other hand, Bank of America survey of fund managers finds that the biggest trade today is the short China trade meaning that most fund managers are extremely negative on China. Let us look at both sides of the view.

On the UBS front, there appears to be a clear valuation concerns building up on India. In fact, UBS has gone to the extent of saying that it finds Indian markets unattractive due to extremely expensive valuations. Since the valuations are extremely unfavourable relative to ASEAN, UBS is underweight on India, Taiwan and Australia. At the same time, UBS is overweight on Indonesia, Philippines, Singapore and it has also just upgraded China.

Now for the fund manager survey by Bank of America Securities. The Bank of America survey has found fund managers most worried about the risk of stagflation in China in the light of inflation and the Evergrande crisis. Fund managers have globally underlined inflation, China slowdown and COVID as the 3 most dominant risks, necessarily in that pecking order. Short China remains the big trade idea for global fund managers.