CLSA's Tactical Reversal: Betting on India's Resilience

Global brokerage CLSA has shifted its strategy from Chinese to Indian equities, reversing its earlier stance partly due to geopolitical challenges and economic struggles in China. The move acknowledges India's relative stability despite recent market issuance challenges, highlighting a rebalance in global investment strategies.

Global brokerage firm CLSA has reversed its prior decision to pivot from Indian equities to Chinese stocks, now choosing to raise its India allocation. The shift comes as Donald Trump's U.S. election victory exacerbates geopolitical challenges for Chinese markets, prompting CLSA to retrace its steps and favor Indian investments.

Previously, CLSA had scaled back its overweight position on Indian equities from 20% to 10%, reallocating resources towards China. This was based on perceived early recovery signs in the Chinese market, but subsequent hurdles, including deflationary pressures and rising youth unemployment, have changed the landscape.

In contrast, India is seen as comparatively resilient, with stable energy prices offering a buffer amidst a strengthening U.S. dollar. Despite ongoing foreign investor outflows, strong domestic demand and a favorable credit environment could make Indian stocks an attractive opportunity for global investors seeking market stability.

(With inputs from agencies.)