Mowat warned that continued weakness in US equities could spill over to global markets. “If US equities are having a hard time, it tends to be difficult for other equities to do well,” he said in an interview with CNBC-TV18.
With rising trade tensions and economic uncertainty, investors are re-evaluating risk. Mowat expects a tough summer for the US market, with weak data and earnings downgrades due to higher tariffs.
In that context, India and China both appear relatively better placed — but for different reasons.
China’s equity market, he noted, is benefitting from positive earnings revisions and cheaper valuations. “Chinese tech names are relatively inexpensive,” he said.
In contrast, India’s growth remains solid, but valuations remain a concern. And investors are going through a period of P/E (price to earnings) compression — where they’re less willing to pay high prices for stocks relative to their earnings because the outlook is uncertain.
“It’s a very sensible P/E compression, because we’re concerned that the economic outlook is very difficult to predict, so you have less confidence to pay up for high valuations,” he said. With discount rates unlikely to fall enough to offset that uncertainty, he added, investors remain cautious about buying into expensive markets like India.
