Andrade mentioned that investors will not get stocks at cheap prices in India, adding that they need to wait for some time and good news is not far away
Kenneth Andrade
The global economy will bounce back once a likely deflationary situation across countries is over, which will also lead to interest rates becoming more manageable, said Kenneth Andrade, founder and CEO at Old Bridge Capital Management.
The investor believes that large economies will shut down in the near future due to high energy prices ahead of the winter. Post which, prices will eventually fall and the inflation problem would be tamed.
“We’ll have to see what comes out after a recession … the world economy is shutting down for winter for the simple reason that energy prices are too high … there’s a demand collapse which leads to deflation,” he said in an interview to CNBC-TV18.
The veteran investor also shared his views on the commodity sector and said that he does not expect global commodity prices to remain deflationary for a long period of time due to population growth, increased demand and higher consumption levels worldwide.
“I don’t think that commodity prices will ever be deflationary for a long period of time,” he added.
Andrade mentioned that investors will not get stocks at cheap prices in India, adding that they need to wait for some time and good news is not far away.
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Talking about the agriculture space, he said that valuations in the sector are fair given it’s an industry which is consolidated. “Valuations are fair. It’s an industry that is consolidated. There is no second or third manufacturer of any of these products out there and even the converters are getting more consolidated than they have ever been before,” he said.
While commenting on the banking sector, Andrade said that even though banks have a very high correlation to GDP growth, it is not necessary that all banks are profitable.
He also mentioned that information technology and financial services are two large contributors to urbanization. And if wage increases remain higher than nominal GDP growth, the consumption patterns in those certain areas could be extremely robust.
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