According to Christopher Wood (global head of equity strategy, Jefferies), China offers a more attractive short-term investment than India for those who look at Asian markets other than Japan.

Wood declared Wednesday, “Structurally speaking, I’m very bullish about India.” It’s about to begin a residential property cycle, which had been in decline for seven years.

On CNBC’s “The Future”, he said, “But in short-term I would prefer China to India, because India is going to be susceptible to any Fed tightening or tapering scares.”Street Signs Asia.”

Beijing’s economic policies have made it difficult for Chinese investors to trade in the Chinese market. regulatory crackdown on the tech sectorInternet companies are particularly targeted. Tightening of policy in the real estate market, with a view to curbing excesses, alsoInvestor sentiment was affected.

MSCI China, which is often used by foreign investors as a benchmark, has fallen around 20% over the past year.

“I consider the internet’s worst regulatory crackdown to be the most severe.” [sector]Wood added that “it is over,” Wood said, “It’s now up to us to decide how we enforce the new rules and increase our risk premium.”

Wood says that China has been tightening its monetary policy since the beginning of this year. However, it is now at the end of the maximum level of tightening. It’s not likely that China will see a significant amount of easing, but there may be small steps that move China in an opposite direction to the Fed.

He said, “So this dynamic creates more constructive backdrops for Chinese equities.”

An analyst previously stated that China’s slowing growth rate is likely to make it more difficult for policymakers to take action. incremental loosening across monetary, fiscal and regulatory policy.

Wood explained that his ideal view on China was to have Chinese equities but hedge it with Chinese government bonds. It remains the most attractive market for government bonds in major markets.

It Chinese yuanIt is still expected that it will remain strong. Any pullback, he said, is “buying opportunity”.

India’s stock exchange has been resilientThis year, despite the economic setbacks caused by the coronavirus epidemic, it was a record year. NSE Nifty 50 index broke the 18,000 level in October and is up around 22% year-to-date while the benchmark S&P BSE Sensex is up about 20%.

Federal Reserve Chair Jerome PowellThis week, it was indicated that U.S. central bank could step up effortsTo reduce monthly bond purchase rates more rapidly

When the outbreak of coronavirus infected people early last year, the Fed made unprecedented policy adjustments. To support the U.S. financial market and economy, it reduced interest rates to zero. It also established a monthly $120 billion bond-buying program.

The Fed usually raises the interest rate. investors reallocate capital away from emerging markets and put them in U.S. assetsBecause they offer higher returns. It causes an exchange rate depreciation of emerging market currencies with the greenback. This puts pressure on dollars-denominated debt.

According to Jahangir Aziz (JPMorgan’s chief emerging market economist), India’s economy will be “reasonably buffered” if the Fed doesn’t move aggressively in its policy.

Aziz, a CNBC host, stated that “there is barely any credit growth. Consumption is not there. Investment growth is lacking. Current account deficit is very well contained.”Squawk Box Asia.” He also said that the Reserve Bank of India has substantial foreign exchange reserves.

On November 19, 2009, the RBI had $640 billion of foreign exchange reserves.

Aziz explained that capital flows would have to adapt to changes in the global environment, however, India’s external vulnerability should not be a concern.