China more attractive than India on valuations: Lyn Alden

Lyn Alden, Founder of Lyn Alden Investment Strategy, says Chinese equities currently offer better value over Indian counterparts. “While India is attractive, it had a nice run recently, and overall, there is still decent news priced into it compared to some other markets. However, China is still kind of unusually inexpensive, so it is mostly valuation play in that sense.”It’s not just the cheap valuations, but also the potential boost from recent developments in trade that tilts her preference in favour of China. The significant rollback of US tariffs on Chinese goods is a welcome development, she added.

She also likes emerging markets more than developed markets, except in the financials space. “One exception, maybe, is financials, I like them both in developed and developing countries. But in terms of broad equities, emerging is more attractive here… ,” she said.

President Donald Trump’s agreement with China to temporarily slash tariffs for 90 days provided some relief. The Trump administration agreed after talks this weekend in Switzerland to pare back its 145% in tariffs charged on imports from China to 30%. China,  in turn, reduced its retaliatory import taxes on US goods from 125% to 10%.“The prior tariff rates were essentially an embargo. When kind of analysing different companies say throughout the US that import Chinese products, many of them were in complete standstill. They had, little idea of how they were going to operate in the coming weeks and months, when you are at literally over 100% tariffs,” Alden said.

In contrast, with tariffs reduced to around 30%, while still a significant cost, companies are better able to adapt and resume normal operations. This shift supports a more stable flow of Chinese goods into the US market.

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