The investors in the emerging markets would be better off if they hedge their positions in oil vulnerable markets such as India, a renowned global investor said. The investors – both in equity and debt segments – should hedge their positions in oil vulnerable markets like India and Indonesia with overweights in Russia, said Christopher Wood, managing director, equity strategist at CLSA in his weekly note GREED & fear.
“GREED & fear continues to believe that the oil price can go much higher in the current cycle despite the correction in prices seen in recent days. The key reason is that there has been chronic under investment in new supply while energy demand remains strong the result of this collapse in investment is declaration in the oil industry’s reserves and so-called reserve replacement ratio,” Christopher Wood said.
Even as we continue to see developments around the trade war, with the Donald Trump administration imposing heavy tariffs on Chinese imports, CLSA’s Chris Wood recently said that the tariff war escalation will impact the auto industry. “One obvious threat would be Trump’s threat, if followed through on to impose 20-25% tariff on global auto imports. Such a move would almost certainly trigger retaliation in the auto industry and cause renewed focus on the peaking out of globalisation and retreat from Pax Americana,” Chris Wood had said earlier last week.
Notably, earlier last week, the US administration threatened to impose 10% tariffs on another $200bn (£151bn) worth of Chinese imports, which was immediately met by Beijing’s pledge to take “firm and forceful measures” to retaliate.
While the emerging markets continue to feel the pressure of a rising US Dollar, Wood noted recently that conditions are becoming difficult for emerging market (EM) investors. Chris Wood said that US monetary tightening expectations have increased.
