Shipping containers sit at Kwai Tsing Container Port Terminals in Hong Kong, China. (Photographer: Lam Yik Fei/ Bloomberg)

Trump’s Trade War Is Not All Bad For Markets, Enam’s Sridhar Sivaram Says

The impact of tariff spat between the U.S. and China would not be too severe on the financial markets as President Trump’s “good negotiating tactics” will avert a full-blown trade war.

That's the word coming in from Sridhar Sivaram, investment director of principal investment group Enam Holdings Pvt. Ltd. The U.S. cannot manufacture everything that they import from China but they have some sort of a negotiating power right now, Sivaram told BloombergQuint in an interview. “China has more to lose than the U.S. if it becomes a full blown trade war,” he added.

Emerging markets, including India, have corrected after the Trump administration imposed restrictions on various products imported from China. Following Trump's move, the Asian nation decided to reciprocate with duties on several imported products from the U.S.

Sridhar also sees the recent correction in the Indian equities as only a collateral damage of the trade war and a good opportunity to invest in some quality stocks.

This is the time to look for themes that will work over the next 18-24 months.
Sridhar Sivaram, Director-Investment, Enam Holdings

Here’s what he said on some other sectors in the interview:

Financials

  • Retail facing banks are favourable.
  • National Company Law Tribunal proceedings to augur well for corporate facing banks.
  • Not against public sector banks because of current valuations; these stocks are still a ‘hope trade’ on likely earnings recovery going forward.

Insurance Sector Valuations

  • Growth numbers muted for these companies over the last few months
  • Giving multiple to embedded value makes no sense; insurance companies over-valued at current levels.

HFCs, MFIs

  • Bearish on microfinance institutions and housing finance companies.
  • Positive on small finance banks which have diversified beyond microfinance.
  • Prefer pure play banks versus small finance banks.

Pharma

  • Not bullish on pharma sector yet.
  • Can look at stock-specific opportunities in the sector.
  • Not witnessing visibility in the sector from a 18-24 month perspective; there are other opportunities available in the market.

FY19 Earnings Growth

  • Market may end up with 20 percent earnings growth in FY19.
  • Commodities may disappoint on earnings front.
  • Financials will be the flag-bearers for earnings growth in FY19.

Watch the entire interview here

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