Markets
| AUD based returns (end 04.04.2025) | MTD | YTD | 1 year |
|---|---|---|---|
|
MSCI India |
0.46% |
-3.13% |
7.40% |
|
MSCI EM |
1.62% |
3.92% |
15.99% |
|
MSCI China |
1.32% |
15.79% |
49.47% |
|
ASX 200 Accum. |
-2.23% |
-4.97% |
1.56% |
|
MSCI NZ |
1.92% |
-7.71% |
0.14% |
|
MSCI World |
-5.69% |
-7.98% |
8.82% |
Source: MSCI. Data as of 04/04/25
- China and Emerging Markets have been the leader over the last 12 months and YTD as stimulus measures and cheap valuations seem to have appeased investors who had concerns over allocating to China.
- The Indian equity markets pulled back significantly from September 2024 to February 2025 (15% from peak to trough), driven by China stimulus, concerns about Trump tariffs and a recalibration of earnings growth back to the longterm run rate of 10% (< last 3-year average of 20%).
- MTD so far, whilst Trump tariffs have increased global equity market volatility, the fall in the Indian equity markets have been balanced by the drop in the AUD. Market volatility remains a concern due to newly announced tariffs by President Trump and potential retaliatory measures.
- Inflation eased significantly to 3.6%, allowing the Reserve Bank of India opportunity to extend its rate-cut cycle later this month, which would support economic growth.
- We look forward to 4Q earnings results from mid-April to end of May
Themes
| Country | Tariff Rate |
Trade Deficit US$bn |
|---|---|---|
|
China |
34% |
295 |
|
European Union |
20% |
236 |
|
Vietnam |
46% |
123 |
|
Taiwan |
32% |
74 |
|
Japan |
24% |
68 |
|
South Korea |
26% |
66 |
|
India |
27% |
46 |
Source: Reuters.com
The Trump Administration has imposed tariffs over and above the 10% currently imposed. Some of the major economies to be impacted are listed below. India does not have a huge incumbent trade position with the US, for a major impact.
Asset classes impacted globally were equity markets, particularly the Nasdaq and currencies like the USD and AUD, in favour of haven assets like bonds, gold and low-risk currencies. Subsequently China has imposed reciprocal tariffs of 34% on US. It is likely that as trade wars intensify, leading to a slowdown in global growth and increasing inflation.
India’s exports to the US are Gems & Jewellery, Pharmaceuticals, Textiles, Machinery, Petroleum Products, Chemicals, Vehicles and Seafood. Additionally, India is a significant exporter of IT Services, with over US$200bn (70% of this to the US), which may also be impacted. However, India appears better placed than exporters like Vietnam, Bangladesh, China, Taiwan and Indonesia.
Sector Impacts: Textiles, Agriculture, Steel & Aluminium, IT Services, Auto components.
The US has raised average import tariffs on Indian goods to 26% from 3.5%. The overall surplus in trade position for India in FY24 was exports of US$78bn, compared to imports of US$42bn. Generic Pharma (US$9bn in FY24) was exempted from tariffs at present, playing a crucial role in reducing healthcare costs in the US (estimated US$200bn p.a.).
Impact on India’s GDP growth is expected to be -0.4% (Elara Research) for FY26. Local demand sectors and manufacturing favouring import substitution, driven by government orders, are likely to perform better in the short term.
INDIA AVENUE EQUITY FUND
- Kaveri Seeds was driven by a boost in the agricultural budget announced by the government in February 2025. The stock has a 2% weight in the portfolio.
- Coromandel International proposed plans to acquire a 53% stake in NACL Industries, an agrochemical firm. The Fund took profit on the news but still holds 1% in the portfolio.
- Maharashtra Seamless rose after receiving new orders for the supply of seamless pipes in the oil and gas space, indicating robust demand in the sector. (0.6% of the portfolio).
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