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Wells Fargo favourable on India but neutral on EMs; here's why

market | Oct 11, 2021 9:37 AM IST

Wells Fargo favourable on India but neutral on EMs; here's why

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Wells Fargo Investment Institute currently has a neutral view on emerging markets (EMs), Gary Schlossberg, global strategist, told CNBC-TV18. He said, while they don't view countries individually but view areas on the whole, he is relatively favourable on India. He believes India is insulated from certain world trade issues. He further mentioned that if the dollar continues to strengthen then it could put India in a vulnerable spot.

Wells Fargo Investment Institute currently has a neutral view on emerging markets (EMs), Gary Schlossberg, global strategist, told CNBC-TV18.

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“Our view of emerging markets at the moment is neutral. Within that though, and while we do not look at countries individually, we look at the area as a whole, India has to be viewed relatively favourably. It is in the midst of an economic recovery. It is a more closed economy than what we are seeing in Asia and so to some extent, it's insulated by some of the issues, the restraints in world trade that until recently have held down some of these more export-oriented markets,” said Schlossberg.
“However, we are keeping an eye on the dollar. Our view on the dollar continues to be one of gradual weakness over the course of next year, particularly during the second half of 2022, but if the dollar continues to strengthen, India with a fairly sizable dollar-denominated debt is vulnerable to that and so we are keeping an eye on the dollar exchange rate, but at the moment overall, I think between the recovery and India's insularity to some extent, works in favour of the economy and the market,” he said.
On tapering, he said, “We still have the issue of inflation moving higher, at a time when even though these economic numbers are coming in a little bit less than expected, certainly the employment number, it's clear that the economy's underlying tone remains intact, certainly demand, and I think the Fed will respond to that, and announce the beginning of tapering on November 3, at their next meeting.”
For the entire interview, watch the video
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