Christopher Wood, the global head of equity strategy at Jefferies, has reduced his exposure to Indian equities by one percentage point as of October 2, 2024, amidst increasing domestic market volatility. Despite this adjustment, Wood maintains an ‘overweight’ position on Indian markets, reflecting his continued optimism for long-term gains.
Increased Weight on China Amid Rallies
Wood has raised his allocation to Chinese equities by two percentage points. Although he had been ‘underweight’ on China in recent times, this move is aimed at capitalizing on the recent market rally. Additionally, Wood reduced his weightings in Australia and Malaysia by 50 basis points each, as part of his portfolio adjustments.
Geopolitical Risks and Market Impact
Wood highlighted the rising geopolitical tensions in the Middle East, particularly between Iran and Israel, as a key risk for global equity markets. He warned that an escalation could negatively impact markets worldwide, including India, which may not be fully prepared for such a scenario.
Global Markets React to Geopolitical Uncertainty
These adjustments come at a time when a risk-off sentiment is influencing global markets. Geopolitical tensions have driven up crude oil prices, bond yields, and safe-haven assets, while global stock indices experienced slight declines.
Chinese Market Outlook: Stimulus-Driven Gains
On October 2, Chinese shares resumed trading after a holiday and extended their rally driven by stimulus measures, benefiting from attractive valuations. Meanwhile, the Indian market was closed for Gandhi Jayanti on the same day.
Economic Data and Labor Market Trends
On the economic front, job openings unexpectedly increased in August after two months of declines. However, hiring remains subdued, indicating a slowing labor market. Private payroll data, which is set to be released soon, is expected to provide further insights into the labor market’s current state.
