scorecardresearchMarkets may hit bottom in 2023; Ukraine war, China's Covid situation top triggers: Manraj Sekhon of Franklin Templeton

Markets may hit bottom in 2023; Ukraine war, China's Covid situation top triggers: Manraj Sekhon of Franklin Templeton

Updated: 27 Sep 2022, 02:10 PM IST
TL;DR.
  • Manraj Sekhon underscored that in case of an escalation in the Russia-Ukraine war, then it won't be about markets, inflation, interest rates or recession but something totally different.
The Ukraine war and China's Covid situation are the two factors that will keep the market outlook hazy. 

The Ukraine war and China's Covid situation are the two factors that will keep the market outlook hazy. 

Markets may touch the bottom in 2023 as the headwinds in terms of the Russia-Ukraine war and Covid in China are the two biggest factors that keep the outlook hazy, said Manraj S Sekhon, head of Templeton Global Investments and CIO, Franklin Templeton Emerging Markets Equity, in an interview with the Economic Times (ET).

On being asked whether he sees a further fall in 2023, he said: "I think we are going to test the bottoms. It's going to be sharp in parts."

"Today, we know what to expect from the Federal Reserve more than we knew six months ago. The two big questions we are yet to conclude on are how will the Russia-Ukraine war resolve and how China comes out of Covid. Those two results will drive the markets," Sekhon told ET.

"If you look at the fiscal situation, there are stresses in the UK and the US. What you are seeing around the world is a reset. The big elephant in the room is the Russia-Ukraine situation and how that plays out," Sekhon said.

China could come out of Covid positively. Russia-Ukraine will be a bit more difficult to predict, he said.

He said the developed world will see a recession in 2023 and it is going to impact probably in ways we can't even imagine now.

"There is a whole confluence of factors, driving markets, and geopolitics. And we have got a new set of variables, for example, the situation between Russia and Ukraine. Europe is going to have a very, very painful period for at least the next 12 to 18 months, possibly longer," he said.

He said there will be a spillover but India will be less impacted because its economy is domestic-driven.

"Look at what has happened in Europe and China. You put it all together and India is like an oasis because it is a domestic story. You are seeing a new credit cycle develop. The digitisation of the economy has accelerated post-Covid. That in itself will keep a lid on inflation because the amount of productivity improves as the economy shifts at the margin from offline to online," said Sekhon.

 

Disclaimer: This article is based on an ET interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.

Article
How to deal with the stock market losses?
First Published: 27 Sep 2022, 02:10 PM IST