DONALD TRUMP’S victory in the US presidential election 2024 might encourage global investors to trust India’s financial markets more, thanks to the new president-elect’s economic policies, including protectionist schemes that could trigger market volatility.
According to a report by Reuters, Trump’s decisive victory over Kamala Harris last week and his impending return to the office early next year has left investors uncertain.
However, analysts feel that India stands to gain in this situation, thanks to its robust economic growth and limited exposure to the Chinese and American consumer markets. Strong local demand for equities and a central bank overworking to make the currency stable will boost India’s significance amid global uncertainty, they added, according to the report.
It is also likely that stocks in the Indian economy, the third-largest in Asia, will get backing from strong domestic buying due to the limited dependence of its firms on export revenues.
That holds significance since markets fear the new American president will reintroduce his ‘America First’ policies, raising fears of a worldwide trade war.
China may bear the brunt
China could bear the brunt as Trump has threatened tariffs of 60 per cent or more on all imports from the world’s second-largest economy. Tariffs on China are likely to hit export-oriented Asian economies, the Reuters report said, citing analysts at Societe Generale, who feel India is in a better position than Korea and Taiwan to deal with the impact.
Some investors pivoted away from India to buy Chinese stocks recently. Still, Sat Duhra, a portfolio manager on the Asia (ex-Japan) equity team at Janus Henderson Investors and based in Hong Kong, said there could be a quick reverse trend, thanks to India’s status as a safe haven, the Reuters report added.
South Asians Globally
