Chris Wood of Jefferies bets on India as global trade storm brews; raises allocation in Asia Pacific portfolio | Stock Market News
Source: Live Mint
In a week marked by global financial turbulence and mounting protectionist fears, Jefferies’ Chris Wood has doubled down on India. In the latest edition of his GREED & fear newsletter, the veteran strategist announced a two-percentage-point increase in India’s allocation within Jefferies’ Asia Pacific ex-Japan relative-return portfolio—raising the country to Overweight status by trimming exposure to Taiwan. The move underscores Jefferies’ belief that India could prove to be a macroeconomic safe haven in a world rattled by recession fears and erratic tariff policies.
India’s Macro Shield in a Shaky World
Chris Wood credited the shift to a detailed analysis by Mahesh Nandurkar, Jefferies’ Head of India Research. According to Wood, Nandurkar laid out a compelling five-point argument favoring India—centered on the country’s relative insulation from global shocks. At the top of the list is India’s low dependence on trade with the United States and China, which shields it from the kind of direct economic blowback that’s now hammering export-reliant economies.
As protectionist policies gain traction globally, India’s low average tariff incidence emerges as a strategic edge, Wood wrote. Adding to the appeal is the recent decline in oil prices—a crucial positive for India, which is a net oil importer. Lower oil costs are expected to ease pressure on both inflation and the current account deficit, creating macroeconomic headroom for growth.
FPIs on the Sidelines, RBI in the Driver’s Seat
Nandurkar, as cited by Chris Wood, also sees a case for a surge in foreign portfolio investor (FPI) interest, noting that India still has room for increased allocations. This comes at a time when the Reserve Bank of India maintains a growth-friendly policy stance, in contrast to the tightening seen in many other major economies. While Jefferies hopes that Washington’s aggressive trade rhetoric may eventually moderate, weakening trends in both the US and Chinese economies remain its base case.
In line with this portfolio reshuffle, Jefferies also cut its exposure to global-facing sectors like IT and metals—acknowledging that they are likely to feel the brunt of a synchronized global slowdown.
US Markets: “Impoverishment Day” and the Crumbling Risk-Free Narrative
While betting on India’s resilience, Chris Wood issued a stark warning on US markets. In his latest GREED & fear commentary, he described the April 2 tariff shock as “Impoverishment Day,” citing the evaporation of US$7.4 trillion in US stock market wealth and a staggering US$12.8 trillion in global equity losses as of Tuesday’s close. Although a minor rebound followed President Trump’s partial reversal, Wood noted the damage was already done.
What especially caught Wood’s attention was a puzzling market reaction: the US dollar weakening even as long-term Treasury yields climbed—a rare combination during a risk-off phase. This points to deeper structural concerns, Wood argued, suggesting that fears around the growing supply of US debt might be undermining the very foundation of Treasury bonds as “risk-free” assets. And if that credibility is shaken, the US dollar’s reserve currency status could also be at risk.
Wood dismissed theories of Chinese retaliation through bond sales, arguing instead that the recent Treasury sell-off was likely triggered by forced unwinding of the “basis trade”—a leveraged arbitrage strategy.
Tariffs, Recession, and Misplaced Expectations
According to Wood, the structure of the newly announced tariffs—based crudely on bilateral trade deficits—has undermined US credibility, especially among European investors. While a 90-day pause in reciprocal tariffs has offered temporary relief to all but China (which faces a 125 percent levy), Wood questioned whether this reprieve would hold.
Still, he warned that tariffs ultimately function as regressive taxes borne by American consumers, not foreign exporters—a fact likely to catch many by surprise as prices of imported goods rise.
As Chris Wood sees it, global investors are now navigating a tale of two markets—one where India’s macro strengths and domestic resilience make it a compelling overweight bet, and another where the US financial system is flashing warning signals across credit, equity, and currency markets. While India’s path may be bolstered by falling oil prices and accommodative policy, the US faces the dual threat of policy missteps and systemic leverage. In this evolving landscape, Jefferies’ strategy is clear: lean into macro stability and steer clear of rising global volatility.
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