Emerging markets to benefit from dollar index stabilization: Matt Orton
"All of these are really attractive places to be putting money to work right now. So, I would try and not focus on the negatives, focus on incremental progress and the opportunities that have been created," says
Matt Orton
,
Raymond James Investment
.
But seems China and US are finally willing to talk, sit across the table, and it seems like both parties do not want such high tariffs.
Matt Orton:
I think that is exactly where we are seeing more constructive cues coming from leadership both in the White House and in Beijing and that is just what we are looking for.
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What the market has lacked for quite a while since April 2nd is any form of certainty. And while I do not think we have any certainty from these discussions, there is at least a positive movement towards trying to rectify some of these trade issues.
And so, I try and point to all of these small positives whenever I talk to clients because the biggest conversation to have is that despite the markets and some of the pain and how uncertain we have all felt, there have been a lot of good opportunities that have resulted from this and that we are going to get to a light at the end of the tunnel.
And so, we should be thinking about and starting to take advantage of some of these opportunities especially in higher quality parts of the market that lean into more durable secular growth trends or that might provide more unique offsets from some of the tariff uncertainties in countries like say India or in European defence companies or in cyber security.
All of these are really attractive places to be putting money to work right now. So, I would try and not focus on the negatives, focus on incremental progress and the opportunities that have been created.
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If you look at the way how the shift now is tilting towards India, you have a lot of commentators now talking about the fact that how Indian markets is looking pretty good, well poised in this sort of a scenario given the fact that you have the interest rate easing cycle underway. You have some of our manufacturing indicators talking about the fact that things are moving in the right direction. Do you think it is already too early to call a win for the Indian markets when you compare it to the Chinese markets or would you like to take it a bit easy?
Matt Orton:
So, I have been constructive on India for quite a while, really since the late part of the winter into March. I think that the draw down in the Indian markets just looked overdone and as someone who is always invested in the Indian markets, there have been places to hide out through the draw down that that the market experienced over the past six months or so.
But I do not think it is too early to be to be saying this is a place that investors really need to look at seriously as a long-term investment because not only is this an offset to portfolios from some of the tariff worries that we have, but here is a market that has got less than 2% of GDP coming from anything that has caught up in tariffs, but even more importantly than that, you have a growing domestic economy.
You have a lot of policies that are aligned with growth. You have a growing consumer base. The financial system is very-very strong. You have easing interest rates and you have just gone through a valuation contraction.
So, you also do not have the overhang that the Chinese markets have which is just an antagonistic government where you do not know what they are going to do with respect to expropriating private companies. So that has always been a trade not a long-term investment. So, I am encouraged that it seems like more foreign investors, some of my co-workers in the industry are finally starting to see the message that this is a good place to put long-term capital to work and this right now is a very good opportunity to do so.
But how do you see the
dollar index
moving because that has seen a bit of a cool off and some respite coming in for the
emerging markets
but now given the commentary and given a bit of a confidence coming back into the US markets with a momentum upwards, do you believe that there is a scope that the dollar index could once again give a signal of an up move from here on?
Matt Orton:
Yes, the dollar index certainly looks like it is a little bit exhausted with respect to the selloff that we have. So, I certainly would not be surprised if we see a little bit of a relief rally. I do not think it is going to be a sustainable rally though, at least until we get some sort of really strong clarity with respect to where tariff policy is going to end.
So, the downward trend is still in place, but it is going to ease. It is going to normalise and hopefully it will stay a little bit steadier at these lower levels, which again is very beneficial to more emerging market economies. It is beneficial to India. So, again, it is another reason to be well diversified in overall investor portfolios.
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