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IT, metals safer spots than banks if third COVID wave strikes: Julius Baer

Updated : June 21, 2021 16:36:46 IST

The banking sector might face pressure if the country sees a third wave of the coronavirus pandemic, according to Mark Matthews of Bank Julius Baer & Co, on Monday.

“If it’s true that we (India) may be entering into a third wave then that wouldn’t be good for the banks. One would assume that non-performing assets will rise. So, in order of priority, very long-term would be IT and as tactical opportunity metals, and then banks,” said Matthews.

Speaking in an interview with CNBC-TV18, he said, “We were worried when we upgraded (India) in February and the horrific second wave happened right after that, but we stuck with the call and so happy we did, in retrospect.”

On global markets, he said, “It’s an opportunity to buy but I do think it’s not a going up all the time market anymore. I think it will be choppy, but had a big pullback in financials and materials, somewhere in the magnitude of 6 percent.”

“Between the two (financials and materials), my preference would be materials because the yield curve is flattened in America and that’s not good for the margins of the banks, but we are still in some kind of global economic recovery; it’s a very unequal one but it is happening. Therefore, if I were to buy something, I would buy inflation-linked companies that sold off hard last week,” Matthews reasoned.

For the entire interview, watch the video.
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