There is hardly any chance of recovery in global market in the coming days unless policy makers offer positive talks, says Manish Singh, Crossbridge Capital LLP. The only silver line is a hope of recovery emerging in fourth quarter when China property market reports green shoots, Singh adds.
Since India is part of global market, Singh says disturbances in China and US will continue to have an impact on it.
Below is the transcript of Manish Singh’s interview with Reema Tendulkar and Sumaira Abidi on CNBC-TV18.
Reema: What have you made of the carnage in global equity markets this entire week and what is the way forward? Do you see much lower levels in store?
A: Of course, it has been a very bad night and a very bad week as well. It seems the buyers are completely missing in the market. It is not unexpected wholly but what is surprising is that it has been a slow grind down. So, you have not seen a one-day move of 4-5 percent or a one-week move of 10 percent and things are slowing down. We had the European purchasing managers’ index (PMI) number this morning in France which is also weak. And we will get the German number in another 20 minutes. My view is that, yes, things are going to remain weak. So, you will have weak performance and weak equity performance going forward as well unless and until we see some positive talk from policy makers or it gets to a certain level when it brings back the buyers. So, it is going to be a weak market, a very sideways market where you do not expect a big gain to happen anytime soon.
Sumaira: So, if the call is that it is going to remain a weak market, what would be your biggest worry? Would it be China, would it be the Fed or would it be what is happening in Europe?
A: I think it is a cumulative effect of everything really because we saw the PMI numbers in China this morning which was weak. I would add a bit of caution because if you look at housing factor and the importance of property market in China, there was a statistics out early this week which showed that the house prices are rising in almost half the market – 37 out of 60 regions that they have. But the most important thing from that was that the number of new homes built there has slowed down sharply which means that inventory is being run down. So as soon as the inventory runs down, you will have a new start in manufacturing a new start in making property and the combined effect of that. So, it is likely that you might see that data gets weak in over next one month or two months and then things start coming back in Q4. So, that is a positive thing to bear in mind. In Europe, I would say, European Central Bank (ECB) is very much behind, I should say the market, but the economy is keeping things weak.
And the next question is US. I was of the belief that US is going to raise in September. Now, I do not feel so certain that they will do it. So, let us see what pans out, but it is a bit like a holiday market where there is not enough buyers, so the grind is very slow and lower. So, let us see where it stops. But yes, you are right, at this moment there is very little positivity in the market.
Reema: How worried should we be about the political uncertainty in Greece because of Alexis Tsipras’ surprise resignation? And will it have an impact on the broader equity markets?
A: I should say that yes, he had a great run in the last election where he won around 99 seats plus 50 that you get for coming out of majority party. I do not think that he is going to exceed that number given that left-wing party is going to leave his coalition, left-wing members will leave his party. But I do not see a constitutional crisis either, because they have got the crunch of money which they are going to use to pay the ECB. The election is going to be in one month’s time. The consensus feel within Greece is that they want to stay in the Euro and they do understand that if they make any political error, then that could be very bad for Greece and Greek economy. So, I still believe that they will form a sort of coalition. I do not think Trispras’ majority is going to increase anymore than last time, but you will have to put from the new democracy and parts of another to form a government which he is going to run just as he has run so far and he has signed a deal with Greece. Because Greece did have an opportunity to walk out of Euro in July which they did not do so, I doubt whether they will do it now. But things are going to be bad on economic front for Greece and that is for sure.
Sumaira: Just a quick last word on India. We are now inching closer to, we have erased all the gains for 2015. Do you see a lot more downside for our market from here on?
A: I do and I remember a conversation I had a few weeks ago where I said that it is going to be the side with market, you are not going to get a positive return. But every time it goes to 8,000 or something, you have to buy the Nifty. That is my view. Every time it gets there, you buy it again. But then you will have to put it in short-term because so long as the things with US is not clear, whether they are going to raise rates or not, it will have an impact on currencies and as long as things are hanging over in China, it will have an impact on emerging markets across. So, I think you have to choose your levels to add, but then you do not see a sustained rally anytime soon.