The big story this morning is the 25 basis points (bps) rate cut by the US Federal Reserve. Mixo Das, who looks after Asia equity and quant strategy at JPMorgan, shared his views on the same.

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“I think the Fed rate cut was well priced in, the 25 bps and people were looking for guidance from what the Fed is going to do the next and the Jerome Powell wasn’t very clear on what the Fed is looking at going forward and his comments for the US economy is quite strong was taken by the markets as being a little bit more hawkish,” Das said on the sidelines of JP Morgan Investor Conference.

“Looking forward, our economists are still looking for two more rate cuts this year from the Fed. Generally speaking, the whole trend of easing policy globally is still going to continue. Even though we are currently in September going through a phase where if you look at bond yields did spike up especially in developed markets and that is more to do with flows and technicals rather than the policy direction itself, so all in all if you look at the EM outlook, the earnings trend is very poor but with the support from policy easing and the fact that there are no significant major imbalances, either in the US or in EM, we do think we will be able to avoid the recession but it is not going to be a great market outlook. So we still have to trade the range, be tactical about our positioning,” he added.

“If you look at India right now, it is more to do with growth and I think that has spooked the investors. If you think about where India’s growth momentum has been going, there is a structural component to it which you could argue is global in nature and then there is a cyclical part to it. It is the cyclical part, which has investors worried but when I speak to the investors, most of them tend to agree with our view that this cyclical slowdown will bottom out quite soon. So perhaps sometime later this year in Q4 we will start to see this bottom forming or maybe early Q1 and the market, in anticipation, will start to price that in rather soon. Even though we are near-term cautious on India given this growth slowdown is persisting, asset quality issues, liquidity issues haven’t gone away but on a medium-term to long-term basis, India remains a very strong market for us,” said Das.

“India is still an overweight market for us. JPMorgan strongly believes in the future prospects of the country and we are definitely quite excited about the long-term trends that are playing right now which is effectively a reversal of the deleveraging cycle that has been going on for 10 years, India benefiting from the US-China trade war and further reform momentum under second Modi administration. So all those remain quite positive,” said Das.

First Published:Sept 19, 2019 10:06 AM IST