Freeman described the current phase as one marked by persistent uncertainty. “Well, it is a moving chessboard, especially given the ongoing chaos that Donald Trump is causing—not only in terms of markets, but possibly in terms of the world order changing. And the biggest concern I have is whether this is going to be permanent, or will things go back to what we used to think of as normal,” he said.
On whether that normalcy could return, Freeman urged caution. “It is a little early. We need to see a little more cohesion among the opposition party, you could say,” he noted.
Trump’s influence, according to Freeman, is unlikely to fade anytime soon. “Yes, he is not slowing down in the least,” he said, adding that the real risk lies not in whether systems continue to function, but in how sentiment changes. “Even if the world is functioning, sentiment—both on the investor side and on the consumer side—can shift. In the United States, many consumers are tapped out on their credit cards, the used car market is seeing a tremendous amount of defaults, which is impacting banks that focus on subprime credit, and the consumer market can be fickle. That is where the real risk is.”
While U.S. markets have largely absorbed shocks so far, Freeman warned that proposed policy changes could have unintended consequences. On plans to cap credit card interest rates at 10%, he said, “It is going to be detrimental to consumers. It is going to be hard for the banks, but the banks’ reaction, if their interest rates are capped at 10%, is that they are just not going to issue credit cards. There is a big piece of the U.S. consumer market that really needs credit, and banks and credit card issuers customarily factor in a sizable loss factor. Ten percent is going to make it completely unprofitable.”
Looking ahead to mid-term elections and the policy focus on domestic consumption, Freeman believes volatility will persist. “It just creates a volatile sentiment situation,” he said, highlighting how quickly institutional capital can move. “There is a real risk that some people in Manhattan are going to wake up in the morning and the risk committee is going to say, ‘We have to do X,’ or from London or Switzerland. There is a limit to how much institutional investors can withstand because businesses and investors need to plan while managing portfolio risk at the same time. It makes it far more difficult, and that is going to trickle down to the ground economy.”
Against this backdrop, emerging markets—and India in particular—stand to benefit. “If you look at what happened in the fourth quarter, the flows to emerging markets and to India were incredible,” Freeman said. “The returns for people in EM funds were finally being highly rewarded. I actually think that in terms of relative growth rates, you are going to see more money coming into emerging markets, which is positive for India. There is a lot of basket investing and index investing, and to the extent India is included in certain funds, it is going to benefit.”On global markets in the near term, Freeman expects watchfulness rather than panic. “I do not think we are going to see anything dramatic, but CEOs and fund managers are really going to be watching very closely,” he said, noting that the appointment of a new Federal Reserve chair under a Trump administration will be closely scrutinised. “Balancing being a Trump appointee with the historic independence of the Fed is going to be a very hard job.”
Addressing why foreign institutional investor (FII) holdings in India are at a decadal low despite strong domestic flows, Freeman pointed to relative returns and currency risk. “It is very risky for U.S. investors to invest in the Indian market when the rupee takes a hit because you can end up with a double-whammy—rupee devaluation and the market going down,” he explained. He added that while public market flows may appear weak, substantial foreign capital has entered India through private equity channels.
On the Union Budget, Freeman cautioned against policy surprises. “If something like a sudden capital gains tax announcement happens, that would be detrimental. But I think the government has learnt a lot of lessons from that experience,” he said, adding that any easing of investment-related provisions would help restore confidence, particularly for long-term infrastructure capital.
Finally, on China’s role amid shifting global alliances, Freeman struck a measured tone. “The Trump administration has not focused on China as much recently,” he said. While tariffs have had less impact on U.S. consumers than expected, he does not foresee China dominating the narrative as it once did.
As global investors recalibrate amid policy uncertainty, shifting alliances and fragile sentiment, Freeman’s message is clear: growth differentials and stability will drive capital, and in that equation, emerging markets like India continue to hold an important place on the global chessboard.
