Chris Wood seems to be fearless and unselfish when it comes to China and India

 Chris Wood seems to be fearless and unselfish when it comes to China and India

Chris Wood seems to be fearless and unselfish when it comes to China and India

The performance of the Indian and Chinese markets has been quite dissimilar. The wider market indexes have risen 55% in Indian equities so far this year, despite a 14% decline in the CSI 300, which is a proxy for Chinese companies.

As far as investing in India and China—the two biggest developing markets—Christopher Wood, global head of equities strategy at Jefferies and publisher of the monthly newsletter Greed and Fear, is neither scared nor aggressive.

The performance of the Indian and Chinese markets has been quite dissimilar. The wider market indexes have risen 55% in Indian equities so far this year, despite a 14% decline in the CSI 300, which is a proxy for Chinese companies.

According to common wisdom promoted by renowned investor Warren Buffett, in such a circumstance, one should be greedy about the Chinese market since everyone expects further downside there, and one should be fearful of the Indian markets because everyone has become greedy. I'm terrified.

In his email on December 14, Wood said, "Normally, such contradictory performances would be a signal to go the other way in terms of buying China and selling India." However, (I) am not convinced to take such a drastic measure. "And neither will anyone else, although a surge in China's outperformance could happen at any time should there be a positive surprise on the policy front."

With the way India's economy is doing, Wood said that "all systems go" there still. Wood emphasized the September quarter's better-than-expected GDP growth and October's 12.1% year-over-year increase in an indicator that tracks the production of eight so-called key sectors.

Cement, coal, crude oil, power, fertilizers, natural gas, steel, refinery products, and fertilizers are considered core industries. After an annual gain of 12.5 percent in August, this is the second-largest rise in the growth of key industries since June 2022.

In Q2FY24, India's real GDP increased 7.6% year over year, a percentage point more than expected. According to Wood, the results also demonstrated that investment, not consumption, is currently driving the Indian economy, breaking with the previous ten years' trend.

"The contrast with China couldn't be more dramatic," Wood said. The very divergent performance of China's and India's long-only portfolios reflects this as well. In terms of total return expressed in US dollars, China's portfolio has decreased by 12.1% year over year, whereas India's portfolio has increased by 41.2%. The portfolio's top-performing Indian stock has gained 309 percent so far this year, while China's worst-performing company has lost 55 percent.

Wood is the manager of many Asian stock portfolios. In the majority of Asian long-only strategies, he has overweighted Indian equities.