Foreign investors unlikely to return to EM in a hurry: Geoff Lewis

Indian markets have tumbled over 10 per cent thus far in the calendar year 2016 (CY16) on the back of domestic and global factors, with the foreign institutional investors withdrawing over $2 billion during this period. Hong Kong - based Geoff Lewis, senior strategist (Asia), Manulife Asset Management, which has around $301 billion in assets under management globally, tells Puneet Wadhwathat CY16 will likely be another year of net FII outflows for EM overall, though the pace of outflows should subside by mid-year. Edited excerpts  Indian stock market astrology prediction

Are the global equity markets strongly in a bear grip or can there be a silver lining as we move ahead into 2016?

In January, Investors found themselves caught up in a perfect storm that no-one had anticipated or forewarned them against. These fears are understandable. There will inevitably be some spill over effects on the real economy from the January stock market correction. But unless markets fall a lot further in the first half (H12016) and then stay depressed, we do not think the January correction is a big enough shock to undermine our base case scenario of moderate growth and low inflation in 2016.

We simply do not foresee either a US or global economic recession within our forecasting horizon, based on the high-frequency economic data that we track and a wide variety of recession gauges. This view assumes that potentially higher US rates won't tip the US or global economy into a recession.           Himanshu Tiwari Astrologer Blog

What is your outlook regarding rate hikes by the US Federal Reserve (US Fed)?

After the first rate hike by the Fed in December, markets have now moved on to the extent/number of rate hikes next year. We expect the US yield curve to flatten given low inflation expectations. We are of the view that having raised rates once, the US Fed will be very cautious in raising them again.

Moreover, the US Fed is well aware of global deflation risks. Given the dreary economic indicators we have seen in the US so far this year, I think it is more likely the Fed will stay on hold in March.

The latest Fed dots suggest the Fed will hike rates four times by 25 basis points over the course of 2016. The markets have priced in zero rate hikes in 2016. For the latter to occur, the Fed would have to materially revise its growth and inflation forecasts downward at the March FOMC meeting. Our view is straight down the middle between the FOMC and the markets-we expect a 25bps hike in June and then one more in the second half of 2016. The greatest risk to the US economy continues to be the Fed tightening monetary policy too far, too fast. Commodity Market Astrology Tips