The bulls market which started in the month of November after Donald Trump became the 45th US President may take a breather after Republicans pulled the legislation to overhaul the US healthcare system. But that doesn't mean the tax agenda is dead, Ken Peng, Asia Pacific Investment strategist at Citi Private Bank said in an interview with CNBC-TV18.“The setback for the Healthcare Bill doesn't mean the Tax Reform agenda is ‘Dead’. It now puts more emphasis on tax reforms, in that line of thought; overall global recovery is still there and corporate earnings are likely to grow," he said.
Peng further added that setback from the Healthcare Bill is not a trend reversal but a correction that could extend up to 5-10 percent in US markets; but emerging markets like India and China are likely to do well.
Both, India and China are domestic stories and given the fact that the US dollar has lost a bit of its strength will augur well for both the emerging markets. The Indian rupee has already appreciated by 4 percent against the US Dollar so far in the year 2017.
"I think EM correction is not likely to be that bad because the US Dollar has become softer and threat of higher US interest rates is more distant, and emerging markets like India and particularly China are domestic stories particular in the listed companies pace," said Peng.
He further added that even during periods of correction in US markets, I expect outperformance in emerging markets simply because the US Dollar is not going to be a big problem.
In the emerging market space, investors should look at India which is consensus overweight as well as China. There is a bit of resistance that we are witnessing with Sensex near 30K, even Hang Seng we are coming up to historical resistance levels, explains Peng.
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