India Is The Best Alternative To China Amid Trade Tensions, Says JPMorgan’s Sullivan
The national flags of China, left, and India sit on a desk during a conference in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

India Is The Best Alternative To China Amid Trade Tensions, Says JPMorgan’s Sullivan

Global investors are committing a “mistake” by not considering India as an alternative supply-chain hub amid simmering U.S.-China trade tensions, according to JPMorgan’s James Sullivan.

“Most of the investors think Vietnam or other Asean nations [as a new trade destination] due to the global trade realignment,” Sullivan, head of equity research (Asia, ex-Japan), at the global investment banking firm, told BloombergQuint on the sidelines of JPMorgan India Investor Summit. “The Association of South-East Asian Nations are beneficiaries but they are too small to take the incremental foreign flows that China is trying to push off.”

China’s exports unexpectedly contracted 1 percent year-on-year in August. This comes as comes the U.S. slapped additional 10 percent tariff on $300-billion worth Chinese goods at the start of the month. Last week, U.S. President Donald Trump delayed the imposition of additional 5 percent tariffs on $250-billion imports by two weeks to Oct. 15.

India is at a favourable position to draw benefits on account of its non-alignment policy in such trade issues and a relatively greater size of its economy, Sullivan said, adding the country receiving record foreign investment in 2018-19 reflects “nascent” signs of such benefits playing out.

Other Highlights

Asia Equity Strategy

  • JPMorgan is looking at economies with strong domestic demand driven by domestic consumption—India, Indonesia and Thailand fit strongly into the bill.
  • Doesn’t want to get exposed to export-oriented countries such as Taiwan and South Korea as global supply chains get disrupted.

U.S. Economy

  • Odds of a U.S. recession has risen to 45 percent from 25 percent, according to JPMorgan’s analysis.
  • Expects at least three rate cuts from the U.S. Federal Reserve by year-end.
  • These rate cuts to create significant flexibility for emerging market central banks to loosen monetary conditions.

Watch | what James Sullivan has to say about India and its prospects...

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