The US election, a major event has unfolded. We are looking at the impact on potential beneficiaries. Manufacturing companies are witnessing a boom, IT pack, Pharma pack, all are seeing good momentum in business today. But what is your opinion when you talk about these areas that are highly dependent on the policies of the United States?
Jonathan Shissel: It is hoped that the election will be completed in a matter of hours. But the next concern will be what will be the policy on earth? We have heard a lot about possible tariffs, about attempts to weaken the dollar but on the contrary, the dollar has strengthened a little today. It’s all still up in the air. None of us know what policies will be followed.
Therefore, some of the moves in some sectors are a reflection of the recent sell-off as opposed to sudden optimism about exports to the US or US businesses. I still think it’s up in the air. Before we can get a better idea of the stocks and sectors within the market we need to know what the policy will be.
Back home we are discussing how finances are one place you have lied about in the past. But what about consumption as a theme because that’s where the debate is going. Urban consumption seems to be slowing down and regulation has not increased as expected. Is it time to buy because there will be follow-up momentum building that will happen next year or will you find better opportunities and stay away for now?
Jonathan Shissel: In the medium to long term, for anyone looking at the type of stocks in that sector, it’s a great story in terms of the combined growth of urban and rural India. But clearly in the short term, valuations in the sector have traditionally been very volatile, reflecting that great opportunity. So, if the stocks fall further, it is good news and a potential buying opportunity for investors. But in the short term, there might still be a bit more uncertainty that this might be a better time to buy stocks, but from a medium to long-term perspective, if you pick a winner in the consumption space, it looks very attractive.
The Street is a bit divided there because manufacturing is an area that is becoming a stronghold for India, but if this whole narrative around exports comes down to Mr. Trump calling India a tariff king, do you think some of these export-oriented companies will worry? Is there something like that?
Jonathan Shissel: Yes, I think so. Obviously if these companies have local facilities in the US, that’s a different story. But with some of the threats he made earlier during the campaign, any business that is exporting equipment or services to the US will have to take a long, hard look at their business model. So, yes, it is definitely a concern.
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Trump’s victory may not bode well for China, but strong dollar will be a challenge for India too: Jim O’Neill
On the other hand, perhaps less regulation in some parts of the US economy would benefit growth. So yeah, like I said, it’s still very uncertain what’s actually going to happen.
Sales of most auto players have not been up to the mark. We have seen a rough ride ahead for some players. Undoubtedly, the festive season has seen a sharp surge when it comes to retail sales. How are you looking at the auto pack because if you look globally, auto companies have flagged off that they are facing headwinds.
Jonathan Shissel: A different story is playing out globally. The Chinese are making headway in the EV space and that puts a lot of pressure on the traditional strength of European OEMs. So, there are definitely problems.
We are going through a transition in the sector related to EVs, possibly other hybrids etc. The Indian market will also go through that shift. Some players are more advanced than others in that movement. But within India and elsewhere, the concern for many existing players is the impact of Chinese imports. Back to Trump, he’s saying come and build factories, we’re happy if you do that, but we’re not going to let you import cars into the US. So, there is a lot of uncertainty.
Clearly, the big players in India have a huge market share. We will see what happens in space. We are still very optimistic on the outlook, certainly from Maruti, but we have to see going forward.
A Trump victory will reverberate through the global economy
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