Indian stocks to benefit from Trump 2.0 era, says portfolio manager

According to Kunal Desai of GIB Asset Management, investors looking for firms with the potential to be the “blue chips of the future” should look to India.

The portfolio manager said India’s geopolitical positioning is “favorable in the era of Trump 2.0” as investors gauge the country’s ability to take advantage of a possible trade war between China and the US

President-elect Donald Trump has promised to impose heavy tariffs on goods from China when he takes office. Tariffs on goods imported from China to the US is likely to benefit Indiaanalysts say as companies move production to the South Asian country to avoid tariffs.

Speaking to CNBC’s Silvia Amaro, Desai described India as “probably one of the most attractive, secular and scalable investment opportunities in the world.”

Apart from geopolitics, Desai cited the country’s monetary sovereignty, improving return on equity — a key measure of a company’s profitability — and rising private investment as reasons for the investment.

There was also Prime Minister Narendra Modi’s ‘Make in India’ initiative. cited by analysts as a major benefit for some Indian manufacturing companies.

For Desai, “one of the most attractive areas is cables, power cables and wires, which go towards the development of urbanization and infrastructure projects in India.”

He said these businesses are not just looking at India as a “core market” but are also looking to expand and start exporting.

“Given the difficulties that Chinese companies have faced in terms of exports, a number of Indian companies are benefiting as customers look to take a dual approach to their supply chain,” Desai said.

Chinese shares are optimistic

Despite investor concerns that Trump will accelerate “hawkish China policies” after returning to office, the portfolio manager said tensions between the U.S. and China have increased, and widely expected GDP growth target of around 5% in 2025 and fiscal stimulus from Beijing — could “force Chinese politicians to essentially revive the spirit of pets.”

Desai said businesses with “high brand power,” competitive advantages and high profitability are likely to benefit from a potential consumer rebound in the coming years.

“So it creates quite an interesting opportunity for companies that have seen their relative valuations fall, but now they can create a better outlook for the years ahead,” he said, adding that It’s China can be the main beneficiary.

Yum China is one of the largest fast food restaurants in China Yum Brands an umbrella that includes KFC, Taco Bell and Pizza Hut.

Desai is also eyeing the Chinese e-commerce giant JD.comamong the top 10 holdings in his portfolio to benefit from a possible consumer rebound.

The next 18 months, according to him, will be a “a really strong dividend, buyback and capital return story in China that we’ve seen in the US over the last four to five years.”