'India has a can-do spirit': Julius Baer's Mark Matthews at BS BFSI Summit

At the Business Standard BFSI Insight Summit 2025, Julius Baer's Mark Matthews said India's resilience, demographics and 'can-do' spirit keep it a standout in emerging markets

At the Business Standard BFSI Insight Summit 2025 in Mumbai on Friday, Mark Matthews, Managing Director and Head of Research for Asia at Bank Julius Baer & Co, offered a candid assessment of the global equity landscape, emerging markets, and India’s position within it. Reflecting on a year he initially expected to be challenging, Matthews admitted that 2025 had been full of surprises.

Global markets: A year that defied expectations

“If I could rewind the clock,” Matthews said in a conversation with Puneet Wadhwa of Business Standard, “I thought 2025 would be a tough year simply because the S&P 500 had risen 25 per cent in both 2023 and 2024. I thought it deserved a break.” Instead, the S&P is up another 17 per cent, while emerging markets have soared by over 30 per cent.

 

 

“That has made me somewhat uncomfortable forecasting next year,” he added, “because I thought this one would be a down year.”

 

He described the rally as broad-based but admitted that India had underperformed its peers, not because of weakness but due to strong rebounds elsewhere, particularly in China. 

India’s muted performance: Underperforming peers, not potential

India’s benchmark indices have delivered roughly 11–12 per cent annualised returns this year — “a perfectly good return,” Matthews said — but have lagged behind global counterparts.

 

He attributed this to two factors: China’s comeback, which has drawn foreign investors back into its markets, and slower earnings growth in India, which has dampened near-term enthusiasm.

 

However, Matthews expects this to change soon. “We are getting close to an inflection point,” he said. “The combination of monetary easing, GST and income tax cuts, and a favourable base effect could bring back double-digit earnings growth by FY27, making India attractive for global investors again.”

‘A boring year for India, but a healthy correction’

When asked whether Indian markets were dull compared to the action elsewhere, Matthews chuckled, “Yes, it’s been a rather boring market this year.” Yet, he was quick to clarify that this “boring” phase might be constructive.

 

“India tends to take two steps forward after a setback,” he said, recalling 1991 and other moments of crisis that catalysed reform. The current phase of policy easing and tax cuts, he believes, “will end up being a positive.”

No bubble in US markets despite AI frenzy

Despite repeated record highs in the US, Matthews dismissed fears of a bubble. “We are not in a bubble,” he insisted, noting that both valuation multiples and technical indicators are within historical norms.

 

The so-called “Magnificent Seven” tech stocks, led by AI-driven firms such as Nvidia, trade at around 33 times forward earnings, much lower than the 50-times valuations seen during the dot-com era.

AI investment: Boon for the world, risk for the hyperscalers

Matthews offered a nuanced take on artificial intelligence. While US tech giants are pouring staggering sums — an estimated $1.1 trillion over three years — into AI, he warned that these investments might not yield proportional returns for the companies themselves.

 

“The danger lies with the hyperscalers making these massive upfront investments,” he explained. “But for the broader economy, it’s fantastic as AI will enhance productivity and margins across industries. The rest of us get to ride on their coattails.”

 

For India, the takeaway is positive. “You don’t need to spend billions to benefit from AI,” he said. “Just like most of us benefited from the internet without investing in it.”

India’s long-term drivers: Demographics and ‘can-do’ energy

Asked about India’s growth outlook over the next three to five years, Matthews was unequivocal: “Demographics are India’s secret weapon.”

 

He pointed out that India’s working-age population overtook its dependent population in 2018, a demographic dividend that will persist until around 2060. “That’s a huge advantage no other major economy has right now.”

 

He also praised India’s cultural energy. “India has a can-do attitude,” he said, joking that while he personally lacks jugaad, the national spirit of innovation and improvisation is “something the rest of the world could learn from.”

‘India has not lost out; it is just taking a breather’

Matthews rejected the notion that India had fallen behind in the global order. “India hasn’t lost out to the US or China,” he emphasised. “Its long-term story remains intact.”

 

He expects about 15 per cent returns over the next 12 months, underpinned by 16–18 per cent earnings growth in FY27. “That’s a reasonable forecast,” he said, adding that “the market isn’t expensive relative to peers” and that “earnings misses have already halved from previous quarters.”

Trade tariffs: A red herring

On the much-debated issue of trade tariffs and US-India negotiations, Matthews was dismissive. “For the entire Indian economy, it’s frankly irrelevant,” he said. “Exports to the US are just 2–3 per cent of GDP. It’s a lot of hot air.”

 

While acknowledging the pain for sectors like textiles and gems, he said the macro impact is negligible. “This is more politics than economics.”

Commodities and gold: ‘A long bear market, but gold holds its shine’

Matthews believes commodities are in a long-term bear phase, which benefits consumers and manufacturers alike. However, he remains bullish on gold.

 

“Gold has returned about 5 per cent per year in dollars over the past century,” he said, citing its enduring role as a store of value. “The recent spike is not unusual — it is a hedge against inflation and geopolitical uncertainty, particularly after the freezing of Russian assets.”

Policy and taxation: Let markets do their job

On Indian policy, Matthews took a laissez-faire view. “I have always felt the obsession with the Union Budget is overdone,” he said. “The best thing the government can do is let the private sector make money — India’s a capitalistic economy with a long runway.”

 

However, he cautioned that high foreign investor taxes remain a drag on inflows. “India’s capital gains and dividend taxes are higher than most emerging markets. That’s something worth rethinking if you want to stay competitive.”

‘A standout among emerging markets’

Summing up, Matthews said that among emerging markets, India remains a standout performer over the long term.

 

“$100 invested in India in 2005 would be worth $1,800 today,” he said. “That’s an extraordinary return. Compare that to $300 in China or $2,700 in the US. India has done remarkably well.”

 

“India’s not overvalued, not overlooked — just quietly building momentum. With demographics, policy stability, and that can-do attitude, the story’s far from over,” he concluded.