Why is Fidelity International upbeat on Asian markets?

Sunanda Jayaseelan | Updated on January 22, 2018

MEDHA SAMANT, Investment Director, Fidelity International Investment

The growth is good and govts are keen on reform, says Medha Samant

Are the Indian markets ready for the US Fed’s rate hike and what follows? Medha Samant, Investment Director at Fidelity International Investment, speaks to Bloomberg TV India.

How does Fidelity read the way global markets have positioned themselves for the Fed move?

I think all indicators point to a rate hike, so it will be in line with consensus. From a valuation perspective, most of the rate hike has been priced in, especially in Asian markets.

We remain quite positive on Asia for a number of factors. Asia has growth at higher levels than developed markets, governments here are policy reform driven, and the interest rate cycle in Asia has been on an easing mode. We are actually getting incrementally positive as we go into 2016.

We are looking at divergent monetary policies across the globe. How are markets really reading these cues in your opinion?

The scenario this time is going to be different from what happened the last time that the Fed started raising rates. When we look at different regions, the reasons for monetary policy being for what they are, are different. Europe definitely has more signs of stabilisation. In the US, as long as the data holds good, you would see a rate hike. Importantly, China has become a crucial part of the puzzle now. We think Asia will take its cue from China as far as the current situation is concerned. The Chinese authorities and the PBOC are definitely on easing mode. We expect more fiscal stimulus coming in from China next year. If you look at central banks across the region — whether it is India, Indonesia, Korea, even Thailand — with inflation being under control, we are going to see more easy monetary policy.

In the middle of all this volatility, what are the risks from China?

China is today at quite an interesting juncture. There will definitely be debate about what China’s real GDP growth rate is, but one needs to focus on the fact that China cannot continue to grow at very high growth rates for ever. The government in China is determined to rebalance the economy from being based on infrastructure investment to consumption.

So, we really remain positive about this whole long-term story of consumption for the new economy in China. But, it is important to be selective, to be based on the ground.

Published on December 14, 2015

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