Latest news with #BNPParibasAssetManagement
Mint
11 hours ago
- Business
- Mint
Steady nominal GDP growth will gradually boost India's weight in MSCI EM index, says Morris of BNP Paribas AMC
If India continues to grow its nominal GDP at a low double-digit rate, it will support a gradual increase in its weight in the MSCI Emerging Markets Index, said Daniel Morris, chief market strategist at BNP Paribas Asset Management. India is already the second largest weight in this index, and a further increase in weight will help attract more benchmark funds to the country, he told Mint. Drawing a comparison between China and India in the emerging markets, Morris said that, unlike China, which is more export-oriented, India's growth is powered by domestic consumption, services, and a rising middle class, making it a potential beacon of stability and growth in a volatile global environment. Edited excerpts: How would you describe the current global sentiment? Do you think the tariff wars are behind us now? We will know more in 90 days. Right now, the market seems to appreciate that we have moved into the negotiation phase. The original reciprocal tariffs were never meant to stay high, they were a way to get attention and bring countries to the table, which worked. We have already seen reductions and deals like the one with UK are a start, with others in progress. The US holds a strong negotiating position, as it is the world's largest market and a key destination for global exports. While India is less export-dependent, the leverage still matters. Ideally, we will see a positive outcome: slightly higher US tariffs, but lower ones elsewhere. We will have to wait and see how it plays out. Also read: Andy Mukherjee: Importers hit by Trump tariffs could turn to 'glocal banks' With tensions easing, do you think the expected near-term rate cut might now be pushed back? The Fed (US Federal Reserve) made it clear at the last meeting that inflation is still a concern. Since then, one of the rate cuts that markets had priced in has effectively been pulled back. The most recent CPI data did not yet show much pressure on inflation, so now everyone is waiting to see what happens next month. At the same time, the Fed is also watching growth closely. There is a parallel here to the pandemic. Back then, most forecasts for growth and inflation turned out to be wrong, not because the analysts were off, but because we were in completely uncharted territory. No model could really capture what was happening. It feels similar now. We are in a situation we have not seen before, so we are still flying blind in some ways. Everything depends on how the data plays out, both for growth and inflation and the Fed's response will follow from that. I could make a prediction, but honestly, confidence in any forecast is low right now. It is a very volatile, very data-dependent environment. Where is India placed among global peers in the investment landscape? India has emerged as a top global FDI destination, with inflows rising from $36 billion in FY14 to over $80 billion in FY25. In a multi-polar world and constantly changing geopolitical landscape, India appears to be on the right side of the global bloc, with the potential to benefit from global supply chain disruptions, offering a credible alternative to China. Structural reforms like Make in India, PLI (Production Linked Incentive) schemes, and Ease of Doing Business have strengthened its appeal, positioning India as a long-term investment hub. With a young workforce, growing infrastructure and stable macroeconomic outlook, India is well-placed to attract sustained global capital and play a pivotal role in the evolving multipolar world economy. Also read: RBI rate cuts, fiscal support likely to aid FY26 earnings recovery: Sanjay Chawla of Baroda BNP Paribas MF FIIs seem to have made a comeback. Do you think these foreign inflows into India would continue? Yes, FIIs (foreign institutional investors) have made a comeback in April, supported by India's robust macroeconomic backdrop, easing oil prices, and equity market valuations that have become more reasonable. The recent softness in the US dollar index has also contributed to a shift in global capital flows toward emerging markets, with India emerging as a key beneficiary. The Reserve Bank of India has played a crucial role by building a strong foreign exchange reserve buffer, which helps mitigate currency volatility. We are in a situation we have not seen before, so we are still flying blind in some ways. Everything depends on how the data plays out, both for growth and inflation and the Fed's response. It is a very volatile, very data-dependent environment. With a young workforce, growing infrastructure and stable macroeconomic outlook, India is well-placed to attract sustained foreign investor flows. Indian stock markets' reduced correlation with global markets further translates into superior diversification benefits for foreign investors, which will help India get its rightful share of foreign capital flows. What is your region-wise stance? What is different today is that, honestly, we don't have a clear geographical overweight. Broadly speaking, we still like equities, but it is not obvious which markets outside the US are going to outperform. So we are neutral geographically right now. Normally, we would have a regional tilt, but this is one of those odd moments where it is unclear which markets will lead, and that is partly because there is no extreme divergence in valuations and earnings growth expectations across markets. Also read: Trump says Xi agreed to restart the flow of rare earth minerals. Why are rare earths important for Chinese economy? In the emerging market basket, how do you look at India versus China? India stands out among emerging markets due to its domestically driven economy, which offers resilience amid global uncertainty. Unlike China, which is more export-oriented, India's growth is powered by domestic consumption, services and a rising middle class. This makes India a potential beacon of stability and growth in a volatile global environment. If India continues to grow its nominal GDP at a low double-digit rate, it will support a gradual increase in its weight in the MSCI Emerging Markets Index. India is already the second largest weight in this index and further weight increase will help attract more benchmark funds to the country. The gains in China's equity markets have primarily been driven by a few numbers of stocks in the technology sector; there is a similar concentration as seen in the US 'Magnificent 7' stocks. The returns of these stocks in China reflect the talent and innovation we saw in the DeepSeek announcement, as well as the reaffirmation of the government's support for the sector. We believe the outlook here is more encouraging, while the rest of the market suffers both under the threat of tariffs as well as the weak domestic demand environment. Let's shift to asset classes like gold and silver that have already seen a strong run-up. Do you think it might be time to reduce exposure to precious metals? After the very good performance, we have moved back to neutral on precious metals. We have already seen gold prices pull back a bit as geopolitical tensions have eased, which makes sense. But looking ahead, there are still two key drivers supporting gold. First, some central banks have been reallocating from US Treasuries into gold, something we expect to continue, which should support prices over the medium term. Second, with the ongoing uncertainty around US policy, gold continues to serve as a hedge against unexpected events. So while short-term volatility is expected, the medium-term outlook remains positive. How do you see the dollar moving forward, now that tensions between the two giants are easing? Despite expectations for Fed rates to stay higher, which would normally support a stronger dollar, we have seen it weaken over the past month or so. We think that has been mainly driven by fund flows, with foreign investors reallocating some of their portfolios out of the US into other markets. As we have said before, we are neutral on where exactly that money is heading. The key question now is whether that reallocation has mostly played out. While it is hard to predict, we could see some stabilisation in the dollar going forward.
Yahoo
21-03-2025
- Business
- Yahoo
Focusing on tariffs 'misses the point,' this strategist says
BNP Paribas Asset Management chief market strategist Daniel Morris tells Julie Hyman and Josh Lipton, joined by Epistrophy Capital Research chief market strategist and The Drill Down podcast host Cory Johnson, that focusing only on tariffs "misses the point," highlighting that the market (^DJI, ^IXIC, ^GSPC) expects a soft landing for the economy in 2025. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. Well markets point to muted action after another volatile week on Wall Street, and our next guest says the economy's soft landing is what's really behind the weakness so far this year. Joining us now is Daniel Morris, BNP Asset Management Chief Market Strategist, and with us for the hour, of course the one and only, Corey Johnson, Pistrophy Capital Chief Market Strategist and host of the Drill Down podcast. Welcome to you both. Uh, Dan, uh start with you here on the markets and I thought, Dan, your comments are interesting, you look at the market action this year, Dan, and you say, in your opinion, this has really been about much more about the macro, it's about the slowing growth more than the tariffs, Dan. Walk us through that, 'cause we can't tell you we had a lot of strategists on really the word so far we hear over and over again point, you know, focus, the attention has been on tariffs. Why do you say that? Well I think that misses a point, and that's important, because if you're not analyzing what's really going on in the market currently I think you then miss what might come next. So think back to what we thought was going to be the outlook for 2025 before the election, and the word we kept repeating over and over of course was "soft landing." Uh, so that meant growth was supposed to slow. Uh, inflation then would come back down towards target, and then the Fed cuts rates, and we were all gonna be quite happy. Now we perhaps got a bit distracted by what happened subsequently with the election, of course the markets are pricing in what it anticipated as pro-growth policies from Trump, but we've got to remember there's a sequencing effect here. Uh, if that happens, it's not going to be right away. You know, you need time for these things to filter through for the economy. Economy's going to continue doing essentially what it was going to do, and I think it's that soft landing that we anticipated. So, from that point of view, we shouldn't be surprised. That's what we thought was going to happen, and I think fundamentally that's the key thing that's behind the market. Of course, tariffs come on top of that, but the key point I think is the soft landing. But it is a softer landing than anticipated by many. I mean, you're looking at GDP forecast that a lot of places are revising lower, and many are attributing that to the sort of survey data that we've gotten, the weakening, sort of confidence, in part. Yeah, I guess I again kinda question the analysis that's going on there. So if we go back to the growth that we had at the end of last year, 2.8% if you look at core core GDP, and well above trend we expected that to go down, right? That's all part of that picture. Towards two-ish, let's say. So we're kind of going in that direction anyway. I think some of the numbers that you see in the calculations of the GDP now are a function of the surge in imports you had ahead of the tariffs, so that does have a mathematical impact on the GDP calculation. But if a lot of those imports just end up in inventories, you'll more or less see an offset in the GDP calculation when the figures come out. So I still think we're looking at a two-handle for GDP for the first quarter. We'll see. Not an economist. No predictions on what's going to come out.
South China Morning Post
10-03-2025
- Business
- South China Morning Post
European bond yields set to rise as US' Ukraine stance boosts military spend: BNP Paribas
Long-term European government bond yields will continue to rise amid increased government spending on defence as a result of the US retreat from its commitment on Ukraine, according to BNP Paribas Asset Management. Advertisement 'We're beginning to get a steepening of the European yield curve,' said James McAlevey, the French bank's head of global aggregate and absolute return. This means that long-term yields are growing faster than short-term ones. A week ago, US President Donald Trump ordered a 'pause' on aid to Ukraine to pressure Ukrainian President Volodymyr Zelensky to engage in negotiations to end the war. As the US withdraws its support, European countries have been reinforcing their commitments. 'European fixed-income investors are waking up to the idea that even within Europe, we're going to start getting more fiscal expenditure on defence, not less,' said McAlevey, 'We're not talking small numbers here.' On March 1, the UK approved a £2.26 billion (US$2.9 billion) loan to Ukraine to enhance its defence capabilities. On Tuesday, the European Commission announced a plan to lend up to €150 billion (US$162.7 billion) to member states to help them boost military spending. Advertisement Total 2024 defence expenditures by European Union member states were estimated at €326 billion, or about 1.9 per cent of the EU's gross domestic product. The proportion is expected to approach 3 per cent as they ramp up their spending. The bond-yield curve started to steepen because the market was anticipating bond issuances as governments raise money to support the higher spending, McAlevey said.
Bloomberg
07-02-2025
- Business
- Bloomberg
Great Opportunities in AI, Tech Supply Chain, BNP Says
Nadia Grant, BNP Paribas Asset Management's global equity head, discusses investment opportunities in the artificial intelligence CapEx theme, saying it is going to be "a long upward trend" but may also be characterized by "a lot of volatility." Speaking on Bloomberg Television, Grant adds that along the whole AI supply chain there are "great opportunities." (Source: Bloomberg)
