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Monday, April 20, 2009

Indian Market Is Very Cheap v/s China : Nomura

veer on Monday, April 20, 2009 |


In an interview with CNBC TV 18,

Mr. Paul Schulte, Chief Regional Equity Strategist of Nomura, Said that the global markets may test earlier lows. He said that several Asian markets seemed to have bottomed out. He also sees steel as a depreciating asset and steel stock as a value trap. Further comparing India with China he said,

"India is extremely cheap compared to China." He believes that there is a fundametal difference in developments in Asia versus West.

The one and only thing that is driving asset prices right now is policy. Policymakers around the world are responding to the immense deflationary downturn that we have seen globally, with unprecedented, never-seen-before, extremely powerful stimuli, both in central bank balance sheet expansion and in fiscal expansion, which are according to what we have done recently something like 11% of Gross Domestic Product (GDP) globally.

In the case of China it is 19%, in the case of the US it is around 14%. So, we are talking about even for the US and China – about 20% of GDP for China, and around 14% of GDP for the US. So, we are talking about a total stimulus expansion of around USD 6 trillion and we are talking about governments that are taking the risk away from investors and giving it to taxpayers. That taxpayer bill is going to come within two years. But that taxpayer bill is not an issue now. So, I am in the camp that this rally can continue for a while. It is all about policy.

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