Kamal Ghorui
Jefferies’ global equity strategist Christopher Wood has said that Pakistan’s ongoing equity rally reflects a high-beta, IMF-driven trading opportunity rather than a structural shift, while maintaining that India remains his core long-term investment bet, backed by stronger fundamentals and improving valuations.In his latest GREED & fear newsletter, the India bull said Pakistan’s market offers opportunities around bailout cycles, but reiterated that India remains the region’s stronger long-term investment story.These bailout phases, he said, often open up “powerful trading windows” when sentiment shifts from distress to stabilisation.Using the most recent IMF programme agreed in September 2024 as an example, Wood highlighted that the MSCI Pakistan Index has surged 84% in US dollar terms since then. Over the same period, Pakistan has outperformed MSCI India by 124 percentage points in dollar returns.He cautioned, however, that such outperformance is cyclical in nature. Since the start of the century, India has beaten Pakistan by 653% in US dollar terms, reflecting stronger macroeconomic fundamentals, deeper reforms and a more consistent corporate earnings trajectory, ET reported.Wood remains marginally overweight on India in his Asia Pacific ex-Japan portfolio despite recent market weakness. He termed the first quarter “disastrous”, with India the second-worst performing market in Asia after Indonesia. Foreign investors have sold about $18.5 billion worth of Indian equities so far this year, contributing to a valuation reset. The Nifty’s one-year forward price-to-earnings multiple is now around 18.3 times, close to its 2015–19 pre-Covid average of 16.8 times.He added that India could emerge as a “reverse AI trade” beneficiary if global capital shifts away from expensive technology stocks.According to him, Pakistan is a tactical IMF-cycle trade, while India remains the region’s core long-term investment story.On geopolitics, Wood said Pakistan’s role in brokering a ceasefire in the Iran conflict reflects a broader “TACO” theme, where markets assume crises will be contained.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
