ETMarkets NRI talk: US-China trade tensions could reshape global portfolios—NRIs must rethink strategy, says Quest CEO

Time of India

23-04-2025

As
trade tensions
between the US and China escalate, the global investment landscape is undergoing a profound shift—one that calls for a strategic rethink, especially for Non-Resident Indians (
NRIs
).
In an exclusive interaction with ETMarkets NRI Talk, Rajkumar Singal, CEO of Quest Investment Advisors, highlights how
tariff wars
, supply chain realignments, and geopolitical uncertainties are creating both risks and tactical opportunities across asset classes.
From rebalancing global equity exposure to increasing allocations in INR-denominated assets, and capitalizing on India's rise as a manufacturing alternative, Singal outlines a pragmatic roadmap for NRIs looking to navigate
volatility
and align
portfolios
with long-term goals. Edited Excerpts -
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Thanks for taking the time out. How might escalating trade tensions between major economies like the US and China affect the global investment landscape for NRIs?
Escalating trade tensions between major economies like the US and China have far-reaching implications that ripple across asset classes and geographies.
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While the immediate aim of tariffs and trade barriers may be to correct imbalances or protect domestic industries, the unintended consequences are often broader and more damaging.
Firstly, inflation and demand destruction become key risks. Tariffs raise the cost of imported goods, which leads to higher prices for consumers.
Secondly, we are witnessing disruptions in global supply chains as companies scramble to diversify away from overdependence on China. This reconfiguration adds costs, delays, and complexities
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The combined effect of these forces—higher costs, slower consumption, and uncertain supply—raises the risk of a global economic slowdown or even recession.
We've already seen a synchronized sell-off across asset classes: global equities have corrected, US and Japanese bond yields have risen (pushing prices down), and even the US dollar, typically a safe haven, has weakened due to changing expectations on monetary policy.
For NRIs, this environment increases volatility across traditional portfolios. However, it also creates tactical opportunities:
In the wake of a tariff war, should NRIs consider reallocating part of their portfolio from global equities to safer fixed-income instruments or gold?
The short answer is: not necessarily a wholesale shift, but thoughtful rebalancing makes sense.
A tariff war typically introduces uncertainty—slower global growth, supply chain dislocations, and inflationary pressures. These dynamics increase volatility across equity markets, especially those exposed to global trade like the US, China, and Europe. For NRIs, this raises a valid question about preserving capital and managing risk.
Here's how we think about it. First rebalancing, not retreat, this may be a good time to trim overweight positions in vulnerable sectors or geographies (like export-heavy manufacturing or US tech with China exposure) and reallocate toward more defensive assets.
Secondly fixed-income as a stability anchor so high-quality fixed-income instruments—especially short-duration or inflation-protected ones, or buying long dated stuff where we have more clarity on monetary easing—can provide diversification to the portfolio.
Thirdly, treat gold as a hedge, not a core, gold can play a role as a geopolitical and inflation hedge, but it's not a cash-flow-generating asset. A small allocation (5–10%) helps diversify the portfolio, especially when both equities and bonds are under pressure.
What kind of geographical diversification strategies should NRIs adopt to hedge against the volatility caused by trade wars?
In an increasingly fragmented and protectionist world, NRIs should think beyond just global diversification and focus on the right kind of diversification, especially one that aligns with long-term currency exposure and real-world liabilities.
Most global portfolios today are overweight the U.S.—both in currency (USD) and geography (US equities and fixed income). That trade is crowded.
With rising fiscal imbalances, a stretched dollar, and growing geopolitical risks, this overexposure may no longer offer the same safety net it once did.
Here's what makes sense now: Shift some allocation to Home-Currency Assets
If your financial goals are India-linked—whether family support, eventual relocation, or retirement—it makes sense to allocate more to INR-denominated assets, including Indian equities and fixed income.
This reduces FX risk and increases alignment with your life's cash flows. Balance Dollar Exposure with Asia & EM Allocation, besides India, consider a broader Asia and EM allocation, which tend to benefit from trade re-routing (China+1, manufacturing shifts) and offer growth with less direct vulnerability to US-China tensions.
Look for domestic demand stories, favor geographies and sectors driven by internal consumption, not just exports. These economies tend to be more resilient during global trade disruptions
Could India benefit as a manufacturing alternative amid
US-China trade
tensions, and how can NRIs capitalize on this shift?
India stands to gain significantly from the China + 1 strategy, as global firms diversify supply chains away from China due to rising costs, geopolitical tensions, and over-dependence concerns.
We are already seeing a bit of that in the case of Apple's iPhone production. From nowhere a couple of years back we have already reached $22 bn in FY 2025 and of these $17 bn were for exports.
So global majors like Apple, Foxconn, and Samsung are expanding in India. Other sectors which can benefit include Pharmaceuticals & APIs where China dominates API supply; India is reviving its bulk drug parks to reduce import dependence, Textiles & Apparel where rising Chinese labor costs and factory shutdowns are making India attractive.
Finally, Chemicals & Specialty Chemicals where many global players are moving production of intermediates to India due to stricter environmental norms in China
What role do international investment opportunities play in the portfolios of Indian HNIs, and how are wealth managers facilitating access to these markets?
A) Indians have been able to access international opportunities under the LRS scheme. Amount remitted out for equity/debt investment have gone from USD 400-600 mn in earlier periods to USD 1.2-1.5 bn in FY23 and FY24 respectively.
Large part of that is going to US markets and off late some to Chinese markets.
Largely, I think this is going through regular international banking channels like HSBC but there are quite a few platforms like Interactive Brokers, Vested, Groww etc. which are also facilitating the access to these markets.
I think it's still early stages and limited to very ultra-high net worth individuals who are doing such kind of investments
How is the increasing wealth in Tier 2 and Tier 3 cities influencing your firm's client acquisition and service strategies?
We are quite bullish about Tier 2 and Tier 3 opportunities as we believe there is large untapped market out there. Most of these investors are already investing through traditional mutual fund route but are very interested in tapping bespoke and concentrated portfolio management strategies as well.
Our pitch is that we are offering professional management services for your direct equity portfolio.
Are wealth managers recommending any specific asset classes or geographies as a hedge against trade-related global market turbulence?
A) If you observe generally recommendations have a recency bias so I am assuming investments in gold ETF will be one such in recent times. But please note that this is the 3rd consecutive year for gold where it's showing 20% plus return in INR.
I like gold as a diversification strategy but I will be cautious putting more capital to work going forward
If someone plans to invest $10,000 in India – what should be the ideal asset allocation strategy for the next 3-5 years?
For a 3-5 year view clearly I prefer equity as an asset class and in that either I will allocate it to a more active funds or if it needs to more passive then split that into large cap and mid/small cap.