India a ‘quiet corner’ in Asia; foreign investors may return as earnings bottom out: Herald van der Linde, HSBC

India is emerging as a “quiet corner” in Asia amid turbulence in global equities, according to Herald van der Linde, Chief Asia Equity Strategist at HSBC. In a recent interaction with ET Now, van der Linde highlighted that global funds remain heavily concentrated in Korea and Taiwan, driven by the AI boom, while India has seen reduced foreign allocations. He expects this trend to reverse in the coming months, with investors likely to rotate money back into India, supporting equities.

India vs Other Asian Markets

Van der Linde explained that Korea has become the second-biggest overweight market for global funds, while Taiwan’s TSMC alone represents nearly 10% of portfolios in some cases. In contrast, India has been under-owned, a gap that could soon close.

“Valuations are always a concern in India, but they are supported by the fact that India is the world’s most populous nation and still has certain capital controls. Indian equities deserve a premium,” he said.

He noted that while earnings forecasts have been downgraded over the last year—from 18% growth projections to about 11–12%—the cycle is bottoming out. HSBC now expects earnings growth to stabilise around 8–9% before recovering to 13% in 2026. “We are very close to the bottom of the earnings cycle, and the levers for recovery such as lower interest rates and fiscal stimulus are in place,” van der Linde added.

On this basis, HSBC has set a Sensex target of 94,000 by the end of 2026, reflecting optimism about India’s medium-term prospects.

Live Events

Japan and the currency factor

On Japan, van der Linde struck a cautious tone despite the Nikkei’s record run. He said the Japanese market remains closely tied to currency movements, with a weaker yen supporting exports. However, he does not expect significant further gains as the yen stabilises.

By contrast, India’s market is largely domestically driven. “In India, most companies sell to domestic consumers. A weaker rupee is not necessarily a major concern, provided valuations are attractive. The dynamics are very different compared to Japan or Korea,” he said.

Tariffs on India and global headwinds

Addressing concerns over the US-imposed tariffs on Indian goods, van der Linde said the impact on corporate earnings is limited. “The majority of Indian companies cater to the domestic market—whether it is cars, shampoo, or jewellery. Export-oriented firms feel the pinch, but the broader market impact is more sentiment-driven. If tariffs ease, it will improve sentiment, but even at current levels the direct earnings impact is small,” he noted.

Where the money will flow

Foreign fund flows have been subdued across Asia this year, despite markets gaining nearly 20% on average. Van der Linde attributed this to domestic investors in countries like China and Korea parking excess cash in banks rather than equities. However, he expects gradual reallocation into stocks, mirroring what has already been seen in India in recent years.

For sectoral leadership in India, HSBC favours select private banks, cement companies, and consumer names, while also flagging medical tourism as a medium-term growth story. “Hospitals in India could see rising foreign demand, similar to the medical tourism trends in Singapore and Korea. This is just beginning to take shape in India,” he said.

India at an ‘inflection point’

Overall, HSBC’s Asia strategist sees India at an “inflection point” where earnings are bottoming out, valuations remain reasonable relative to growth prospects, and domestic demand continues to be the key driver. While risks from tariffs and global uncertainty remain, India’s relative stability makes it stand out in the region.
Add as a Reliable and Trusted News Source



_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}