Mark Matthews of Bank Julius Baer sees stronger India earnings, but near-term focus on China

Mark Matthews of Bank Julius Baer & Co believes India’s fundamentals remain solid, but global investor attention is currently shifting toward China. According to him, India’s earnings outlook is improving thanks to tax cuts, fiscal measures, and lower interest rates. “I do believe the earnings will be higher than what the consensus forecasts,” he said.However, foreign investors who had ignored China for several years are now catching up, leaving India temporarily out of focus despite its strong macro backdrop. Matthews added that the large foreign outflows from India this year were basically just a reallocation into China.

He stated that India’s trade deal progress with the United States remains uncertain. While the overall trajectory is positive, Matthews pointed out that policy unpredictability in Washington could slow negotiations. “President Trump makes it up as he goes along,” he remarked, adding that India’s turn “may not be as soon” as expected.

Turning to the US, Matthews said the current earnings season has been stronger than anticipated. Around 140 companies have reported so far, with 83% beating estimates, lifting the blended S&P 500 earnings growth to 9.2% from an initial 7.8%. Optimistic guidance from management is also boosting market confidence.

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He expects US equities to move higher through the end of the year, driven by retail investors and underweight institutional players who may be forced to catch up. Historical trends also support his bullish view — the NASDAQ 100 is poised for a seventh straight monthly gain, and “in all four previous times that happened, the following 12 months saw double-digit returns.”

Still, Matthews warned that the private debt market could pose risks, citing recent bankruptcies in the auto lending space. Yet he believes these issues are not systemic. On the global front, he stated that the US’s share in global imports has fallen to 15%, while China’s exports have reached record highs. This, he said, shows a “global trade realignment” that is gradually weakening America’s leverage over world trade.

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For the entire interview, watch the accompanying video

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