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market | IST

Cryptos useful as small diversification in portfolio; India among standout performers in EMs: Wells Fargo

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“There can be a very small diversified share of the portfolio is in crypto currencies if you have the risk tolerance,” said Gary Schlossberg, Global Strategist, Wells Fargo Investment Institute in an interview with CNBC-TV18. He also said that he is cautious on overseas markets and neutral on EMs (emerging markets). However, he mentioned that India has been a standout performer among its peers in the EM pack.

“There can be a very small diversified share of the portfolio in cryptocurrencies if you have the risk tolerance,” said Gary Schlossberg, Global Strategist, Wells Fargo Investment Institute, in an interview with CNBC-TV18.
As the economic cycle matures within the stock market, he mentioned that he is focusing on largecap quality.
“There will be headwinds from higher interest rates affecting the tech sector as much as we have seen over the past couple of days, but we are not looking for big increase in interest rates. Earnings growth, as strong as we anticipate, should serve the technology sectors well,” he said.
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According to Schlossberg, the economy certainly provides tailwinds in India.
“India does have a strong growth rate. We are looking for growth in the 9-10 percent area for fiscal 2022 and growth rate north of 7 percent perhaps in fiscal 2023. The big risk for overseas market at the moment is this upward move in interest rates and the dollar’s rise with it,” he said.
The rate increase won’t be that dramatic, it will be more gradual, he noted.
“In general, we are a bit more cautious on overseas markets, perhaps neutral towards emerging markets (EMs) generally. We don’t pick and choose among developing countries or EMs. When we look at the economies, there is a great disparity of performance that is emerging. Overall, the global economy will be seeing less synchronized growth in the next 12 months and that holds for EMs as well, and among the standout performers is India,” he said.
According to him, if one is a country allocator or an investor that is looking at a country-by-country basis, India – the earnings outlook backed up by strong economic growth, will be a fairly desirable area to be parking the funds.
He thinks the dollar rise will be more gradual, peaking late next year and that should take some of the pressure off these overseas markets, certainly for the US investors.
The asset strategists are looking for a price target of about USD 90 per barrel on oil over the next six to nine months.
“Organization of Petroleum Exporting Countries (OPEC) is playing the market very well, very cautious and measured increase in output commensurate with moderate growth in the global economy that we expected to see. Europe will be going through a very difficult period over the next six months,” Schlossberg said.
“We don’t see OPEC Plus jumping in with both feet and ramping up production. They are being very measured, very disciplined and that combination provides that underlying tightness in the market which will persist through the better part of the 2022,” he mentioned.
For the full interview, watch the accompanying video.
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