14-05-2025
Trump's policy shift, lower yields, and dollar weakness could revive emerging markets: Anurag Singh
"The collective basket was 3% emerging market, 15-year return Msei, but increasingly China is looking good and India always is steadily looking, it has a steady pace and it looks good as well. So, it should increase, but we need to watch a 10-year yield that is the element," says
Anurag Singh
, Managing Partner,
Ansid Capital
.
So, will money come back to China given that now world is confident that US President Donald Trump has stitched up a deal with China and he is opening new frontiers like Saudi Arabia for Americans?
Anurag Singh:
So, on the margins we have to just keep monitoring the 10-year yield. For some reason, it is back at 4.45, but the way the sentiment is shaping up in US, if the yield touches around 4% and 3.9% and the clamour for rate cut increases, you see CPI inflation is already pretty much under control, all metrics are looking good, as long as we have more stability on the tariff side, yield should drop.
The moment they go below 4%, that is good for
emerging markets
and the flow of money from outside US. Even the dollar has corrected now, so that is also good news in some sense. So that is my take that 10% that goes to emerging market it has not been good for the last 15 years.
The collective basket was 3% emerging market, 15-year return Msei, but increasingly China is looking good and India always is steadily looking, it has a steady pace and it looks good as well. So, it should increase, but we need to watch a 10-year yield that is the element. If China gets money, India will also get money, it goes together that is how I feel about it.
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I go back to that basic point again which is that US markets have recovered, dollar is at 101. For next couple of days, like this short term, when I say couple of days, couple of weeks; couple of quarters, I mean not a quarter, I mean quarter or so, so could US markets outperform emerging markets?
Anurag Singh:
Oh, 100%. So, we are back to the point.
You never say 100% for anything, first time you said 100%.
Anurag Singh:
Well, for this time for us, yes, because I am all in, so that is why. So, the point is earlier that what was the talk before, I mean just go one month back, the talk was that it can we give a 20 multiple to US markets.
The earnings growth looking at, S&P earnings between 260, 270; give a 20-25 multiples, people were saying 5400 to 6,000. Now the 6500 to 7,000 range it will all be back in the fray.
So, listen to Scott Bessent, the tariff is one element, but the other two legs which is deregulation big time on financial sector and everything else and the low taxes which is coming up in the bill, all these three legs will really push up the economy, so the best part is yet to come.
So far the companies who have declared is already 14%, so 14% for the year looks pretty good.
And if that comes out, S&P earnings are 280, apply a 25 multiple 6,500 to 7,000 looks good, so that is a good part. Trump has got the message. It was a bit of a self-goal and he has learnt from it ultimately. We do not know maybe 10% tariffs would stay, but good part is that the team has learnt the lesson.
