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India's Modi Moment Makes The Country a Long Term Buy

09 Oktober 2014
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India's Modi Moment Makes The Country a Long Term Buy
Fresh investment momentum created by the buzz around India's new prime minister Narendra Modi looks set to continue, with infrastructure and consumer sectors looking bright, says JPMorgan's Tai Hui. Tara Joseph reports. (Reuters)

"There are a couple of areas that we think are looking very positive, for example infrastructure," JP Morgan Asset

Bareksa.com - Fresh investment momentum created by the buzz around India's new prime minister Narendra Modi looks set to continue, with infrastructure and consumer sectors looking bright, says JPMorgan's Tai Hui. Tara Joseph reports.

(SOUNDBITE) (English) REUTERS REPORTER, TARA JOSEPH, SAYING:

"Tai, always good to see you."

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(SOUNDBITE) (English) CHIEF MARKET STRATEGIST-ASIA, JPMORGAN ASSET MANAGEMENT, TAI HUI, SAYING:

"Thank you."

(SOUNDBITE) (English) REUTERS REPORTER, TARA JOSEPH, SAYING:

"Let's talk about the Modi moment because it's gone way beyond his first 100 days in office. Is Modi really set to transform India?"

(SOUNDBITE) (English) CHIEF MARKET STRATEGIST-ASIA, JPMORGAN ASSET MANAGEMENT, TAI HUI, SAYING:

"I think if you look at the Indian political landscape in the last, well, one or two decades, this is perhaps the best chance. It's not for sure that it will be done but at least he's got the experience, the track record to set things right. And if you look at his policy priorities in the first three or four months, it's not just about domestic. In fact, he's spent a lot of time traveling both in South Asia, then he went to Japan, he received President Xi Jinping in India. So there's a big international aspect of diplomatic effort he's also trying to drum up as well other than economic reforms."

(SOUNDBITE) (English) REUTERS REPORTER, TARA JOSEPH, SAYING:

"I just want to move to some of the risks that are facing India because right now we have momentum largely built around a new leader but surely there's got to be some worries in terms of whether that can convert into a huge change."

(SOUNDBITE) (English) CHIEF MARKET STRATEGIST-ASIA, JPMORGAN ASSET MANAGEMENT, TAI HUI, SAYING:

"Sure. Well I think the big question here is can he - or can Prime Minister Modi - transform what he did on a state level to the national level, which is obviously a lot more complicated, a lot more consensus buildings required. I think beyond that, there are lots of external factors to think about, for example how the Fed is going to handle this much policy, does that impact on the stability of the currency. Domestic inflation's always been a challenge for India. There's the food price inflation impact on what RBI's going to do. So I think beyond the policy politics in India, we also are very watchful over some of the economic financial dynamics that could impact on India."

(SOUNDBITE) (English) REUTERS REPORTER, TARA JOSEPH, SAYING:

"Of course there's always been a bit of worry for foreign investors going into India. There's a fair amount of nationalism there. Foreign investors have had their fingers burned quite a few times. Do you think Modi's going to change that? We also have new leadership at the central bank, et cetera. Is that helping the path for foreign investors?"

(SOUNDBITE) (English) CHIEF MARKET STRATEGIST-ASIA, JPMORGAN ASSET MANAGEMENT, TAI HUI, SAYING:

"I think we need a little bit more time to observe how the new government, the new administration changes the dynamics because at the end of the day there's still a lot of decisions made at the state level rather than the central level. So some of that nationalism may still remain at those levels but whether he's going to do grab back some of that power or look for ways to protect foreign investors a little better, only time will tell. But the reality is if you look at again his track record at Gujurat, he does do a reasonably good job of protecting foreign investors. And you know when you are working with the governments of Japan and China, I think some of that nationalism could be contained to a certain extent."

(SOUNDBITE) (English) REUTERS REPORTER, TARA JOSEPH, SAYING:

"Yeah, so the momentum is there and he's also got billions of dollars in terms of investment into the country. If you're an investor, how do you look at it? Where do you put your money in India right now?"

(SOUNDBITE) (English) CHIEF MARKET STRATEGIST-ASIA, JPMORGAN ASSET MANAGEMENT, TAI HUI, SAYING:

"Well I think there are a couple of areas that we think are looking very positive, for example infrastructure. If you look at some of the physical infrastructure in India's still way behind what is expected. And you know, if you could have Chinese companies and Japanese companies investing in India, that infrastructure is crucial. And the reality is both countries have pledged to help with setting up some of those infrastructure. So that's one area. The second area I think is going to be very interesting will be the consumer side of the story because as the economy continues to grow and the Indian consumers start to get, break out of the low-income trap where they go into the middle-income group, that's where a lot of the consumer power can be unleashed. And that's where I think a lot of the consumer goods and services could be very interesting over the next three to five years."

(SOUNDBITE) (English) REUTERS REPORTER, TARA JOSEPH, SAYING:

"So in sum, you're already overweight in India but do you think you'll be plowing more resource into stocks there?"

(SOUNDBITE) (English) CHIEF MARKET STRATEGIST-ASIA, JPMORGAN ASSET MANAGEMENT, TAI HUI, SAYING:

"I think we will be opportunistic in terms of trying to tighten the momentum a little bit because we've had a very good run in India so far. Valuation is looking a little rich but earnings provisions are just starting to come through. So I think you know we probably won't necessarily be rushing in at this point in time, but certainly it's a long-term story that we like with regards to India." (Source: Reuters)

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