Just as China’s economic growth looks to be slowing down, India is positioning itself for 20 years of strong growth, says Nikko Asset Management.
Speaking in Sydney yesterday, Nikko Asset Management Asian equities senior portfolio manager Robert Mann pointed towards India as the world’s fastest-growing major economy and the nation of growth for the next 20 years.
“India, in many ways, looks like China did in 2000,” Mr Mann said.
In Nikko AM’s 2017 foreword, Adapting Thinking in a Changing Investment Landscape, Mr Mann attributed this growth to “a strong capitalist democracy” that resulted in “strong private companies that are innovative” as well as globally competitive.
Additionally, he deemed India’s demographics as “very positive” at a time when it was a concern for the rest of the globe.
However, Mr Mann said India’s growth would not look like China’s and that it was not possible for a nation to grow the way China did.
“You can’t take an east Asian growth model from Japan, Korea, Taiwan [or] China and say, ‘well India will be the same’, because they can’t,” he said.
“So what will India do?
“It’s basically lots of little things: it’s about getting rid of inefficiencies, it’s about getting rid of the bureaucracy, a little bit of corruption.”
“It’s huge numbers of small things. It’s hard to do, so you need a really strong government.”
Mr Mann said current Indian Prime Minister Narendra Modi would have broad support from the Indian population for his reformist policies, and cited Mr Modi’s “Three Cs”: corruption, continuation and communication.
Holding India back was “its current account deficit and high inflation”, as well as residues of its socialist past, Mr Mann wrote in the foreword.
“Although India has embraced free-market thinking more than many other similarly large developing countries, a number of structural problems are restricting its economic growth potential – over regulation, systemic corruption, an inefficient bureaucracy and poor infrastructure,” he said.
“Increasing foreign infrastructure investment is a long-term priority for Prime Minister Modi, as he looks to re-invigorate investor confidence in the sector through reducing red tape, raising the cap on foreign investment and simplifying the dispute resolution process.”
Nonetheless, Mr Mann signalled that Modi’s policies were “moving things in the right direction”.
Economists agree that the Reserve Bank is likely to remain in inflation fighting mode until December. ...
According to bfinance, improving portfolio resilience was a key focus for investors during the first quarter of the year. ...