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market | IST

Port Shelter Investment positive on real estate, consumer staples but won't buy massively at current valuations

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“If the big markets have a sniffle, the smaller markets catch cold and that is just one of the risks that you have in emerging markets (EMs). At the moment, I am not terribly worried about the Indian market but obviously it is something to keep an eye on,” said Richard Harris, Chief Executive Officer at Port Shelter Investment Management, in an interview to CNBC-TV18. He also believes that sectors like consumer staples, real estate typically do well in an inflationary environment.

“I am not so sure as to whether I would be a massive buyer in India,” said Richard Harris, Chief Executive Officer at Port Shelter Investment Management, in an interview to CNBC-TV18.
"The Indian market has been quite spectacular compared to many others. But if the big markets have a sniffle, the smaller markets catch cold and that is just one of the risks that you have in emerging markets (EMs). At the moment, I am not terribly worried about the Indian market but obviously it is something to keep an eye on,” he said.
According to Harris, inflation is going to be a global phenomenon and it is going to hit all markets.
“What I would want to do is maybe do some rotation into counters that are likely to do okay in an inflationary environment and these are things like consumer staples, big companies with product lines that are low-ticket items and real estate,” he said.
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Harris believes as a narrative, COVID isn’t necessarily a problem.
“COVID is a former problem of the stock market,” he stated.
He was disappointed to see Jerome Powell reappointed.
“We are going to see more of the same, which is an enormous amount of dither, basically wondering what to do and some wrong signals coming out of it. I think the market is basically now writing off what they are seeing from the Fed,” he said.
The market knows the interest rates are going to go up, he shared.
“The bond market hasn’t done as badly as one would have thought at this point of time partly because the dithering is already priced in but also because the liquidity is so high that the money is going to go somewhere. So we would have normally seen a much weaker bond market at this stage with levels around 2 or even higher,” he said.
He believes inflation is more likely to be 5 percent and the Fed is going to have to do something.
“The question is, is the Fed going to react sharply or they are going to keep tip-toeing around. I think they are going to keep tip-toeing around because they cannot afford to do anything else,” he explained.
In terms of the global market, he said, “We have got liquidity coming through the market, we have got earnings figures looking pretty good because companies have done reasonably well on the rebound and that is likely to continue.”
According to him, the market is in a trend that is not going to end anytime soon even though the fundamentals look suspicious.
For the full interview, watch the accompanying video.
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