In an interview on CNBC-TV18, V Anantha Nageswaran, Senior Economic Advisor to Julius Baer talks about the current global scenario after a near crisis was averted with the passing of the US debt agreement.
Below is a verbatim transcript of his interview with CNBC-TV18’s Udayan Mukherjee and Sonia Shenoy. For complete details watch the accompanying video.
Q: Are you feeling bearish about global equities or do you think we have had a lot of pain and we are ripe for some kind of a bounce?
A: The bounce was expected after the so called debt ceiling increase but is hasn’t happened. Therefore, I am not particularly positive on equities. I am negative on equities. The world has to deal with both structural issues which have not been addressed since 2008 and a cyclical slowdown, both, in the West and East due to inflation concerns and tightening that has happened so far. Overall, the backdrop for equities does not look good.
Q: The US markets have already wiped off all of their yearly gains. Do you anticipate some more of a cut in the global markets?
A: I think so. The fact is the US has now a deal which imposes a short-term fiscal retrenchment which probably is something the country does not need. In the eurozone you have two big counties, Italy and Spain are seeing their bond yields rise. In Asia, you still have inflation concerns.
If by some chance these western countries eventually adopt reflationary policies by an additional round of monetary easing, it is going to complicate the inflation challenge for Asia. So whichever way you slice the argument, I don’t see an upside for equities. In fact I see quite a bit of downside in the second half.
Q: How much lower do you think the Indian market can go?
A: In terms of Sensex, we have always managed to hold the head above 18,000. Therefore, I believe that the market hasn’t really become a value play yet. I would wait to enter into the Indian market
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