CGTN Europe spoke to Santosh Rao, Head of Research and Partner, Manhattan Venture Partners
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00:00Let's get more on this now with Santosh Rao, Head of Research at Manhattan Venture Partners.
00:04Welcome back to the show. Great to have you with us, Santosh.
00:07So global markets increasingly erratic, of course.
00:10Is this just the new normal?
00:12And if so, is there any let-up in sight for investors?
00:17Well, it's the new normal, at least till the dust settles.
00:22I think the whole market is waiting for where Trump wants to take this whole tariff issue.
00:29There's no visibility at what, I mean, it's on again, off again at this point.
00:33So they need some clarity.
00:35The companies cannot plan ahead.
00:37That's why you're not seeing any forecast from these companies,
00:40because they don't know where he's going with that.
00:43So, yes, it's going to be up and down.
00:45Essentially, the big companies are still, the fundamentals are still okay.
00:49You saw the jobs report was still okay.
00:51It was very good, above expectations.
00:53The unemployment rate is pretty solid.
00:55I mean, in the sense that it hasn't changed.
00:57So the participation rate is good.
00:59So the fundamentals are good.
01:01Now, the only issue is forward-looking.
01:03When will everything come into play?
01:05And until that happens, volatility is going to be the name of the game.
01:09It's the market for traders, not for investors.
01:12Investors are going to get a lot of headaches here.
01:15But that's okay.
01:16He wants certain things.
01:18He wants America first, on-shoring, everything.
01:20All those things fall into, he wants to do all that.
01:23And it's going to take some time.
01:24It's going to take some disruption.
01:25So, yes, it is status quo.
01:28Volatility is going to be, for a while, it's going to be, that's going to be the name of the game, for a while.
01:33Volatility, name of the game, I like that.
01:34And just specifically on this latest news, this latest tariff on foreign-made movies,
01:40how do you think investors are likely to respond to that?
01:43Yeah, this is a tough one.
01:46I mean, yes, it's in line with his thinking that everything has to be,
01:51America has to get the credit for doing everything that they're good at.
01:55But he's not taking into account the cost factor here.
01:59How do you value a film production?
02:03I think that's going to be a big issue.
02:05He will get to that in some way or form.
02:07Maybe he'll attack the subsidies.
02:09He'll call it unfair.
02:11China wants to cut back on American imports of movies, things like that.
02:15Companies are doing their stuff.
02:17So, there is definitely a sense of bycotting or rather moving away from U.S.
02:23in terms of kind of putting pressure on the U.S.
02:26But I think what's going to happen, yes, the data supports his logic,
02:31that companies are making money outside.
02:35They're producing here or they're based here,
02:37but making money outside for other foreigners.
02:39He wants the profits to stay here and the production to happen here and the employment here.
02:45So, all those things mean well, but it's very tough to implement.
02:48So, we have to see that.
02:49This is just the first shot at this whole issue.
02:52It's going to take some time, two or three iterations,
02:54till we get to how we value a movie.
02:57So, let's wait and see.
02:58But the cost factor is very compelling in terms of making it outside the U.S.
03:03So, you'll have to contend with that.
03:05Indeed.
03:06And amid all this uncertainty, this lack of clarity in this environment,
03:10what should global investors prioritize?
03:12Do you think diversification, safe havens, or just wait it out?
03:17I would say diversification and safe haven.
03:20That's the name of the game.
03:21Because at this point, yes, U.S. is still good,
03:26but the other countries are relatively better at this point because there's less volatility there.
03:32But I think whatever U.S. does has a dampening effect on the other markets as well.
03:37So, at this point, they need to watch.
03:39I would not go out, take any risks at this point, stay with quality.
03:43And that's the name of the game because you don't want to really go out and then get hit on the head,
03:49get blindsided, so to speak.
03:51So, stay with the tried and tested names.
03:56You know, you have cyclicals like the banks will do well,
03:59financials are doing well,
04:01and the industrials will do well as the economy recovers at this point.
04:04It's going to recover because in the end, he wants growth.
04:07He wants things to develop.
04:09He doesn't want a bad economy.
04:10He wants it good.
04:11So, I think right now he's tinkering on the edges.
04:14He wants the things to be straightened out.
04:16But in the second hundred days,
04:17I think he's going to focus on the other factors that really should help the country.
04:22So, let's wait and see.
04:23I would say at this point, don't do anything drastic.
04:26Don't take too much risk at this time.
04:28Stay with quality because that's where the real growth is.
04:31So, in terms of quality and defensive,
04:32we would say industrials, healthcare,
04:34those are like the safe bets and dividend-paying stocks.
04:38So, I know it's pretty broad-based,
04:40but I think that's where I would stay at this point
04:42and not go out on speculative, no-revenue names.