Indian stocks will benefit from Trump 2.0 era, says portfolio manager

Investors targeting companies with the potential to become the “blue chip companies of the future” should look to India, according to Kunal Desai of GIB Asset Management.

The portfolio manager said India’s geopolitical positioning is “favorable in this Trump 2.0 era” as investors assess the country’s ability to benefit from a possible trade war between China and the United States.

President-elect Donald Trump has promised to impose large tariffs on goods from China when he takes office. Tariffs on goods imported from China to the United States it will probably benefit Indiasay analysts, as companies shift manufacturing to the South Asian nation to avoid duties.

Speaking to CNBC’s Silvia Amaro, Desai described India as “probably one of the most attractive, secular and scalable investment opportunities in the world.”

As for geopolitics, Desai cited the country’s monetary sovereignty, improving return on equity – a key measure of the company’s profitability – and increased private investment as reasons to invest. .

Prime Minister Narendra Modi’s ‘Make in India’ initiative also took place cited by analysts as a great benefit for some Indian manufacturing companies.

For Desai, “one of the most attractive areas is cables, power cables and wires, which enter into the development of urbanization and infrastructure projects in India.”

He said these companies were not only looking at India as a “core market”, but were also looking to expand and start exporting.

“And given the difficulties that Chinese companies have had from an export standpoint, a number of Indian companies are taking advantage of customers looking to take a dual-source approach to their supply chain,” Desai said.

Upbeat on China stocks

Despite investor concerns that Trump will accelerate “popular Chinese policies” upon his return to office, the portfolio manager said tensions are rising between the US and China – and even The widely expected 2025 GDP growth target of around 5% and fiscal stimulus from Beijing – could “force the hand of Chinese politicians, essentially to revive the spirits of domestic animals”.

Desai said companies with “high brand power,” competitive advantages and high profitability are the most likely to benefit from a potential consumer recovery in the coming years.

“So this creates quite an interesting opportunity for companies that have seen their relative valuations fall, but can now create a better outlook for the years to come,” he said, adding that Yum China could be a major benefit.

Yum China is one of the largest fast-food restaurants in China Brands Yum umbrella, which includes KFC, Taco Bell and Pizza Hut.

Desai is also looking forward to the Chinese e-commerce giant JD.comamong the first 10 holdings in his portfolio, to benefit from a possible consumer rebound.

The next 18 months, he said, will see a “really strong dividend, buyback, capital return story to come to China, which is what we’ve really seen in the United States in the last four or five years.”