Jim's India - Glass Half Full?
Yesterday we published the first of our India reports, Sharmila's India: Scuppered. Today it is my turn.In Jim's India: Glass Half Full? we argue that the government really needs to bite the bullet on public-sector bank recapitalisation (and probably consolidation) in order to get the Indian business cycle moving again. Mistakes have undoubtedly been made in Mr Modi's first term in office. The demonetisation episode was a distraction that India could well have done without (and the end results were predictably unimpressive) and the introduction of Goods and Services Tax, while well-intentioned, has been overly complicated both in respect of tax bands and tax filing. However, the worst is probably now over for both of these and the government can start to focus on what really matters - getting the banks back in business.
We look at the various indicators of the Indian economy and conclude that things might just be improving on the investment cycle front, although the evidence is rocky at best. Nevertheless, it is too late to get overly bearish on India. The bad news is pretty much in the price (barring any sensational loss on the election front) and we are confident in the long-term future. The next year is likely to be a choppy period for Indian equities but investors looking to the long term might use that opportunity to accumulate shares.
Asianomics, founded by Dr Jim Walker in 2007 and based in Hong Kong, specialises in economic analysis research, cross-referencing their work with credit cycles, profit cycles and cash flows. Asianomics focus is on developments in the Asia-Pacific region, and they also cover developed markets like the US and Europe.
The Austrian Economics model provides a framework for the economic research. The basis of the School of Austrian Economics is that economies work more efficiently and effectively when companies and individuals are free from excessive interference by government and special interest groups. The Asianomics economic research team includes Deputy Chief Economist Sharmila Whelan who is recognised for non-consensus thinking and her depth and quality of primary research, and Chief Economist Dr. Jim Walker.
Asianomics’ subscribers have access to regular economic commentary, stand-alone Country Reports, Special Reports and Investment Strategy Reports. Dr. Jim Walker also provides weekly webcasts.
Dr. Jim Walker is regarded as one of Asia’s leading economists. Prior to setting up Asianomics, he was the Chief Economist at CLSA Asia-Pacific Markets, where he worked for more than 16 years. He has achieved numerous ‘Best Economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers.
Previous successful calls include:
- In 1995 Dr. Jim Walker wrote about the prospect of Asia being forced off its de facto dollar peg “within the next two-three years”. The Asian Crisis, precipitated by the Thai baht devaluation, began in July 1997.
- Forecasted the US 2007 downturn and financial sector meltdown in series of ‘Apocalypse’ reports.
- Called early the upswing in the Indian stock market in the final quarter of 2013.
Recent Recommendations:
- Overweight China - We are overweight Chinese equities with momentum improvement in the economy.
- Short Sterling, Long Renminbi - China’s currency offers good upside with a positive carry.
- Short European Financials, Long Indian Financials - This is the simplest pair trade to play superior demographics and growth in Asia relative to the region with the biggest problems.
- Long EM Asia, Short Developed countries - South and SE Asia, and direct investors from North Asia, are ‘buy and hold’ investment bets.
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