MUMBAI: Emerging markets equity strategist Adrian Mowat on Friday said that 2018 has been the year of PE multiple derating.
Speaking at the second edition of ETMarkets Global Summit, the EM strategist said he is skeptical about the Trump-Xi meet at G20 summit.
If Chinese economy fails to recover, it will be a genuine risk premium for emerging market, Mowat said.
India, he said, is sitting at the top in terms of forward price multiples.
As developed markets slow down, emerging markets (EMs) would accelerate, he said.The EM strategist said the rupee has overshot a lot on the EM effects.
One of the key stories of 2019, he said, will be a recovery in EM currencies.
Mowat said a recovery in EM currencies will be a key driver for capital from risky assets in the US potentially into the emerging market risk assets.
Mowat said the biggest problem with markets globally is that the biggest equity market (US) is outperforming European and emerging markets (EMs).
Capital, he said, is being moving towards the US, thanks to interest differential -- the difference between interest rate hikes in the US and Europe -- is favouring the dollar.
Mowat said he is extremely bullish on US markets compared with EMs.
On China, he said, shadow banking is shrinking.
China's GDP 6 per cent doesn't feel so, when you look at the other economy data, he said.
The emerging market guru, who worked with the first offshore managed India fund in 1993, said investors do not really invest in economies, but in companies with strong earnings growth.
It is wrong to say Brexit is anti-free trade story, he said.On concerns over rising supplies in oil market, Mowat said he is more concerned about what happens with OPEC and Russia than rising US shale production.Exporters vs domestic cyclicals In an interview to ETNow last week, Mowat said investors need to cut exposure to exporters and start thinking of some more domestic cyclical names that might benefit from an easier macro environment in 2019