Christopher Wood, global head of equities strategy at Jefferies, says cryptocurrencies remain a “vulnerable asset class,” but bitcoin will benefit from the Federal Reserve’s plans to strengthen liquidity and increase rates.
He is still optimistic about the energy sectors but also sees higher oil prices as a short-term risk to Indian markets.
Here's what he told CNBC-TV18 on the crypto, crude, and energy sectors:
'Interesting, long-term story'
Wood said the tightening by the Federal Reserve is likely to accelerate the outperformance of bitcoin over other cryptocurrencies, as the world's largest crypto was a store of value similar to gold.
Wood said that other popular cryptocurrencies such as Ethereum and Solana were similar to high-beta tech stocks, which require extremely high risk and volatility.
Monetary tightening by the Fed will affect risk-prone sectors such as tech and biotechnology, given that they are primarily long-term growth stories that come with a lack of gains in the short term.
Crypto, to them, is disruptive in the long run—in the next five-10 years—and is not a one-game, single-year task.
Referring to so-called decentralized finance, he said, “crypto with DeFi and blockchain technology has the potential to disrupt the banking system as people are already lending and borrowing on the system.”
Bullish on the Metaverse
Wood was also bullish on the metaverse, the immersive virtual world that big tech companies are racing to build, and "Web 3.0", saying that if the Fed doesn't implement the tightening, the sector will "return to great performance." Will come." can-do".
However, given the dramatic policy U-turn by the US central bank, an event Woods said he had not noticed earlier in his career, he suggested selling. "If you're a trader, you should rally and sell growth stocks," Wood said.
big on energy space
Given the huge supply constraints in the global market, timber remains big on energy reserves. “If the current Russia-Ukraine situation resolves or resolves on its own, I would advise people to add risk to energy stocks,” he said.
Wood said the oil market could rally if "the world reopens".
Describing oil as the "biggest risk" for the Indian market, the eminent strategist urged investors to "hold energy-related stocks to mitigate that risk".
Contrary to traditional expectations, the best-performing S&P sector in 2021 was energy, he said.
India faced similar risks in 2006 and experts are concerned that the country is following a similar path of engaging in aggressive selling with foreign investors.
The move "could certainly go against India" in the short term, Wood said, adding that "emerging market investors will be tempted to withdraw money from India because it seems costly because of the Fed's tight exposure".
As a result, they will want to invest more money in China because of China's easing. In addition, the Chinese market is more protective of the Fed's strictures than India.
"Chinese markets were tight last year, so if markets are correct on the Fed's concerns globally, China will actually outperform," Wood said. Also Read.
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