Freeman described the present part as one marked by persistent uncertainty. “Nicely, it’s a shifting chessboard, particularly given the continued chaos that Donald Trump is inflicting—not solely by way of markets, however presumably by way of the world order altering. And the most important concern I’ve is whether or not that is going to be everlasting, or will issues return to what we used to think about as regular,” he stated.
On whether or not that normalcy might return, Freeman urged warning. “It’s a little early. We have to see just a little extra cohesion among the many opposition social gathering, you possibly can say,” he famous.
Trump’s affect, based on Freeman, is unlikely to fade anytime quickly. “Sure, he’s not slowing down within the least,” he stated, including that the true threat lies not in whether or not techniques proceed to operate, however in how sentiment modifications. “Even when the world is functioning, sentiment—each on the investor facet and on the patron facet—can shift. In the USA, many shoppers are tapped out on their bank cards, the used automotive market is seeing an amazing quantity of defaults, which is impacting banks that concentrate on subprime credit score, and the patron market might be fickle. That’s the place the true threat is.”
Whereas U.S. markets have largely absorbed shocks to this point, Freeman warned that proposed coverage modifications might have unintended penalties. On plans to cap bank card rates of interest at 10%, he stated, “It’s going to be detrimental to shoppers. It’s going to be onerous for the banks, however the banks’ response, if their rates of interest are capped at 10%, is that they’re simply not going to difficulty bank cards. There’s a large piece of the U.S. shopper market that actually wants credit score, and banks and bank card issuers typically think about a large loss issue. Ten % goes to make it utterly unprofitable.”
Looking forward to mid-term elections and the coverage deal with home consumption, Freeman believes volatility will persist. “It simply creates a unstable sentiment state of affairs,” he stated, highlighting how shortly institutional capital can transfer. “There’s a actual threat that some folks in Manhattan are going to get up within the morning and the danger committee goes to say, ‘We now have to do X,’ or from London or Switzerland. There’s a restrict to how a lot institutional traders can stand up to as a result of companies and traders have to plan whereas managing portfolio threat on the identical time. It makes it far tougher, and that’s going to trickle all the way down to the bottom financial system.”
In opposition to this backdrop, rising markets—and India specifically—stand to learn. “When you take a look at what occurred within the fourth quarter, the flows to rising markets and to India had been unimaginable,” Freeman stated. “The returns for folks in EM funds had been lastly being extremely rewarded. I really suppose that by way of relative progress charges, you’ll see extra money coming into rising markets, which is optimistic for India. There may be numerous basket investing and index investing, and to the extent India is included in sure funds, it’ll profit.”On world markets within the close to time period, Freeman expects watchfulness reasonably than panic. “I don’t suppose we’re going to see something dramatic, however CEOs and fund managers are actually going to be watching very intently,” he stated, noting that the appointment of a brand new Federal Reserve chair underneath a Trump administration will likely be intently scrutinised. “Balancing being a Trump appointee with the historic independence of the Fed goes to be a really onerous job.”
Addressing why overseas institutional investor (FII) holdings in India are at a decadal low regardless of sturdy home flows, Freeman pointed to relative returns and foreign money threat. “It is rather dangerous for U.S. traders to put money into the Indian market when the rupee takes a success as a result of you may find yourself with a double-whammy—rupee devaluation and the market taking place,” he defined. He added that whereas public market flows could seem weak, substantial overseas capital has entered India by means of non-public fairness channels.
On the Union Funds, Freeman cautioned towards coverage surprises. “If one thing like a sudden capital good points tax announcement occurs, that might be detrimental. However I feel the federal government has learnt numerous classes from that have,” he stated, including that any easing of investment-related provisions would assist restore confidence, significantly for long-term infrastructure capital.
Lastly, on China’s position amid shifting world alliances, Freeman struck a measured tone. “The Trump administration has not targeted on China as a lot lately,” he stated. Whereas tariffs have had much less influence on U.S. shoppers than anticipated, he doesn’t foresee China dominating the narrative because it as soon as did.
As world traders recalibrate amid coverage uncertainty, shifting alliances and fragile sentiment, Freeman’s message is obvious: progress differentials and stability will drive capital, and in that equation, rising markets like India proceed to carry an vital place on the worldwide chessboard.
