Investors not inclined to ‘sell India buy China’ but to ‘sell India buy USA’: Samir Arora

Veteran investor Samir Arora, reacting to CLSA’s move to raise India’s allocation to 20% overweight while reducing China exposure, cautioned on social media platform X that investors should not get ‘unnecessarily excited’, as the focus remains on U.S. markets rather than China.

“CLSA report should not make you unnecessarily excited for a) it is CLSA and not CIA; b) In my view investors were not selling India to buy China but to buy USA,” read Arora’s post on X.

CLSA report should not make you unnecessarily excited for
a) it is CLSA and not CIA
b) In my view investors were not selling India to buy China but to buy USA

Separately, India to USA shift trade would have largely played out with average Indian stock down 10-15% and average US…

— Samir Arora (@Iamsamirarora) November 15, 2024

He noted that the India-to-USA trade shift has likely played out, with Indian stocks down 10-15% and U.S. stocks up 10% since late September, meaning those looking to trade now have already missed a 25% swing.Additionally, he believes that the India-to-USA trade is over now.On Friday, global brokerage firm CLSA raised its ‘overweight’ on Indian stocks and cut its allocation on China in its Asia Pacific portfolio, reversing its switch from Mumbai to Shanghai in October in the wake of the run-up in Chinese equities

The escalation of a trade war with Donald Trump getting re-elected as the US President, scepticism around the strength in the bounce in Chinese stocks, and lower-than-expected stimulus by Beijing are the reasons for the reversal of its optimism around China, it said.

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“We committed a little more at the start of October by tactically deploying some of our over exposure to India towards China, at the time reducing our Indian overweight to 10% from 20% and raising our China allocation to a 5% overweight from the benchmark. We now reverse that trade,” said CLSA.

The global brokerage firm also stated that India has witnessed strong net foreign investor selling since October, while investors they met this year have been waiting specifically for such a buying opportunity to address Indian underexposure.

Domestic appetite remains strong, offsetting foreign jitters, and valuation, though pricey, is now a little more palatable, it said.

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