JPMorgan adds 3 stocks to EM portfolio

By Consultants Review Team Friday, 27 October 2023

JPMorgan has upgraded India equities to 'Overweight' from 'Neutral' and advised investors to use any near-term correction as an opportunity to add and leverage on a positive historical seasonality to general elections. According to the global brokerage, India offers the strongest emerging market (EM) nominal GDP compounding (demographic trends, infrastructure investment needs) and competitive risk-adjusted returns to developed market (DM) equities.

"The roadblocks to EM equities outperforming rise primarily as US long rates rise." The famed USD smile has hampered EM equities on two fronts: growth and rates. "It appears that investors need to see the cycle in the US complete before a sustainable bid for EM equities emerges," JPMorgan stated.

JPMorgan's rating increase for India follows similar ratings upgrades for the local market by other global brokerages. India was been designated as a 'Standout Overweight' by Morgan Stanley. CLSA has increased India's portfolio allocation to 20% above the MSCI benchmark from 40% underweight previously. Furthermore, Nomura India raised India's weight from 'Neutral' to 'Overweight'.

CLSA identified eight positive drivers to support its 20% overweight stance. They included India's return to greater relative profitability in comparison to other emerging economies, the greatest economic growth among main emerging nations, and more controllable energy price as a result of discounted Russian crude.

GDP, according to the brokerage, is supporting a trend breakthrough in earnings per share (EPS). According to the international brokerage, a returning credit impulse suggests robust equities momentum.


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