Investing.com -- UBS has upgraded its view on India and Indonesia, saying these are safer and more locally driven emerging markets, citing concerns over global trade tensions and a tougher investment outlook.
The bank raised Indonesia to “overweight” and India to “neutral” in its latest strategy note on emerging markets.
UBS said it now prefers countries with strong domestic demand, steady earnings, and less reliance on global trade, especially with the U.S.
Indonesia and India stand out for their local focus and ability to hold up earnings even when growth slows, UBS analysts say.
The bank also pointed to falling oil prices as a positive for both economies, since they are major importers.
Indonesia’s stock market, according to UBS, looks attractive with valuations near pandemic-era lows and signs of support from local institutional investors.
The country’s economy is also seen as relatively insulated from global shocks.
India, while more expensive in terms of stock valuations, is still favoured for its stable earnings and domestic strength.
However, UBS stopped short of a full upgrade to “overweight,” citing recent earnings downgrades, policy uncertainty, and unclear benefits from global supply chain shifts.
At the same time, UBS cut its ratings on South Africa and Hong Kong to “neutral.”
It said both markets are more vulnerable to a slowdown in global trade and rising tensions with the U.S.
Overall, UBS said it is taking a more cautious approach to emerging markets, focusing on “defensive and domestic” themes.
It also maintained a positive view on China due to its low valuations and potential boost from economic stimulus.