Forthcoming Corrections in the US Market will affect Asia

The United States has been growing steadily for a while now as the economy is being fueled by low interest rates. As a result, federal government debt is nearly equal to the country's GDP output, and the Federal Reserve is beginning to raise interest rates. This will directly increase the federal government's burden and lead to a fall in the stock market.

Trump unlikely to be able to push market

The US is incredibly expensive and its unlikely that President Trump will be able to push the market higher. This is because the incredibly low interest rates have dominated the stock market for nearly a decade and it is directly led to high valuations. In fact, the US is likely heading for a fall and it may occur within the next 3-6 months. Unless the Trump administration makes some major moves, which is unlikely, the US is unlikely to raise its ceiling. As the federal government has been pumping money into the economy, inflation is likely in the stock market.

Asia will be hit as well

A fall in the US market will directly affect Asian markets, and it would behoove Asian markets to become more defensive in the short term. This is because emerging Asian markets such as India and China can mitigate the effects, and we can expect several strong portfolios to grow over the next decade in Asia. Businesses should ideally seek to reduce their most expensive positions across Asia to shield themselves in the short-term from a fall in the US market. A fall in the US market will have far reaching effects.

India is an attractive market

Based on the FVMR (fundamentals, valuation, momentum, and risk) methodology, India is a very attractive market. We can expect a strong growth in GDP per capita and the country's demographics will play a huge role as a majority of the population is young. On the other hand, China has already reached a pretty high level of GDP per capita and India is more of an untapped market.

India has gotten a little more expensive, but there are several avenues for growth. However, the Indian government needs to rectify the banking crisis in most state-run banks. Damages in the banking sector can devastate the economy. The state-run banks look a little uncertain right now and resolving them would return lending to normal levels.

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