Could India be a hedge against trade wars and tariffs?

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The United States trade war with the rest of the world threatens to shake long -standing alliances, interrupt global supply chains and reinvent methodologies to calculate the appropriate level of reciprocal tariffs. Now add another entry to the economic dogma list that rumbles for the duties of the president of the United States, Donald Trump, the idea of ​​a safe investment.

Historically, the US dollar has strengthened, and treasure prices have recovered, since investors rushed to buy perceived assets to be safe Financial agitation duration.

No anymore, it seems.

In the chaos of the market since the “Day of Liberation” or April 2, several new patterns have emerged, and one shows that investors are seeing India as a coverage against a possible future flow in commercial flows.

Indian values ​​markets, currency and bonds, although they are not a perfect measure of the new trend, have surpassed US shares, dollars and treasurer this year.

Indian actions have also been less volatile, compared to their Asian companions.

Analysts say that a key reason behind thesis movements was the relatively isolated economy of India, which we discussed previously in “Indian Inside” last week.

Morgan Stanley points out that only 12% of India’s economy depends on exports of goods. In addition, exports of goods to the USA. Uu. Achieved an equally closest proportion: 2.1% or GDP. Pharmaceutical imports and comic energy, which are exempt from rates for now, and the goods impacted by the rate represent only 1.7% of Indian’s GDP.

Upasana Chachra, the main economist of the India of the Bank of Wall Street, said that India would have the “lowest exposure” to the United States between Asian economies, and the “direct impact of the highest rates on export demand will be low.”

The country also seems to exhibit qualities that could see that it becomes a safe shelter in the emerging market in the future.

For example, the economy of India is driven by the consumer and less depends on exports than other emerging market economies to boost growth. This makes it relatively well isolated from external shocks, such as commercial wars, according to experts.

Meanwhile, more than four fifths of its capital market are nationally owned. National investors, who regularly have poured billions through systematic investment plans, generally protect the prices of the whims of the events of the duration of foreign investors that exacerbate volatility.

“The fortune of the Indian capital market is decided mostly nationwide,” said Alexander Redman, the main strategist of CLSA shares.

Chachra de Morgan Stanley also pointed out that the recent decrease in oil prices, which precede groups of a deceleration of global growth, is likely to be positive for India, given that energy represents a large part of the Indian import law project. The inverse relationship between global growth and the benefit for the Indian economy seems to be another arrow in the laugh of India.

India imported $ 277 billion in fuel in 2022. This represented 38% of all imports to the country for that year, according to the World Bank data.

“The slowest global growth leads at lower world prices of basic products, as is evident in the decrease in oil prices of ~ 22% YTD, which affects the terms of trade for India positively (because India is a net importer of basic products),” Chaachra added.

The long decrease in the Indian stock market, which preceded the presidential elections of the United States and was promoted by groups on high valuations, has also reduced the prices of shares to more friendly levels.

“India has the most negative [earnings per share] Reviews … In emerging and developed markets with the exception of Indonesia, “said Redman de CLSA.

Analysts have moved their earning forecast per low action for 60% of companies in the Indian MSCI index, compared to 55% of companies in the Asian index of emerging markets of MSCI, according to the facts of the facts.

This may have sacrificed a floor for shares prices and has softened global sale markets in recent weeks.

The question that investors may ask themselves is whether thesis trends are probable to stay or the world will return to their old ways.

Inflation in India cools. The annual inflation rate of India fell to a 3.34% most anticipated in March, the Ministry of Statistics and implementation of the country’s program reported Tuesday. The reading fell for the fifth consecutive month and arrived slightly below the 3.61% seen in February, since the growth in food prices continued to soften. Economists surveyed by Reuters were waiting for a reading or 3.6%

Indian factory production slows down. The Industrial Production Index, which measures factory activity, showed an increase of 2.9% in February, falling strongly from the growth of 5.2% in January. The decelerations in the manufacturing and mining sectors contributed to the decrease, according to the data of the Ministry of Statistics and implementation of the Indian program.

Apple accelerates iPhone shipments from India. In March, the company based in Cupertino exported 600 tons of iPhones, with a value of almost $ 2 billion, from India to the United States before the so -called “reciprocal tariffs” of the president of the United States are activated, according to a Reuters report. Consequently, Foxconn and Tata, Apple’s main suppliers in India, experienced an increase in their export value that month.

Indian actions have been ongoing for their best weekly performance since July 2022. Ingenious 50 The index has increased 4% this week, but the reference point has still decreased by 1.3% this year.

The 10 -year -old Indian government bonds has fallen into 6 basic points during the past week to 6.38%, the lowest since December 2021.

In CNBC TV this week, Shilpak Ambule, High Commissioner from India to Singapore, said Sesbcorp, a company of energy development and urban development based in Singapore, is “actively looking at three or four sites in India” to build new industrial cities. He added that the Indian government is found in “advanced negotiation stages” with Sembcorp on those fronts.

Meanwhile, Chryscapital’s managing partner, Kunal Shroff, said that Indian colleagues pursued initial public offers may depend more on domestic support compared to a decade ago, when the market was determined by foreign institutional investors.

Flash purchasing managers index for many countries will be published on Wednesday, shedding light on how the manufacturing and services sectors remain in the immediate week after the tariff ads of the president of the United States.

April 18: Japan consumer price index for March, China

April 23: India HSBC PMI Flash for AprilUS S&P Global PMI Flash For April, Japan Jibun Bank PMI Flash For April, Euro Zone Hcob PMI Flash For April, United Kingdom S&P Global PMI Flash for April for April