With investors remaining cautious as fears of a global recession intensify in the backdrop of trade war concerns and rise in crude oil prices, Christopher Wood, global head of Equity Strategy at Jefferies, has made some changes to the portfolio in his weekly report 'Greed and fear'.
Wood informed that a 4 percent investment will be initiated in HDFC Life which will be paid for by removing the investment in Qudian and reducing the investments in Bajaj Finance, HDFC and AIA by 2 percentage points, 1 percentage point, and 1 percentage point, respectively.
The report further said that in the case of Bajaj Finance, some profit-taking is called for since the stock is up 697 percent since inclusion in May 2015.
He added that another stock, Nippon Telegraph and Telephone (NTT), will also be added to the Japan equity income portfolio launched last week. A four percentage point position will also be initiated in Sea Limited, the US-listed Singapore-based Asean e-commerce play, in the Asia ex-Japan long-only portfolio.
Crude oil prices have been on a rise on concerns that last weekend's attacks on Saudi Arabia's oil facilities still pose supply risks.
In the report, Wood said that the investors should probably assume that oil stabilises for now in the $60-65 range, though the risk is to the upside.
The Houthi group in Yemen had claimed responsibility for the attack but a senior US official told reporters that evidence indicated Iran was behind it.
US President Donald Trump also blamed Iran for the attack, raising the possibility of a military strike on the country. He said that the US was "locked and loaded" to respond to the attack, while secretary of state Mike Pompeo said: "The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression."
Tehran denied the accusations but the news has revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
"GREED & fear’s base case is that a Trump-led America will not want to get dragged into a war given the nature of the president’s core support base. In this respect, the attacks on the Saudi facilities should be viewed, if indeed Iran is responsible, as Iran making clear that it not only has the potential to disrupt the world’s oil supply but is also willing to do it in response to provocation. In this respect, GREED & fear hears that the immediate trigger for last weekend’s incident was recent Israeli strikes against Iranian allied militias on the Syria-Iraq border. But the original provocation was, obviously, the US pulling out of the nuclear deal.," the report explained.
The report also noted that one point is self-evident that Trump as President has the option to open talks with Iran if he so wishes. Meanwhile, staying on the oil issue, GREED & fear still believes that there will be one last bull market in oil before the end-of-the-fossil-fuel-era story turns out to be true.
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions
First Published: IST