India’s growth collapse dramatic, govt should let deficit slip: Wood
The severe correction in Indian midcap and smallcap stocks is reflecting the real pain in the Indian economy, says Christopher Wood, Global Head of Equity Strategy at Jefferies.
In an interaction with ETNow, he said midcap and smallcap stocks are the best plays on economic recovery as and when it happens. “We expect the economy to recover in next four quarters, and midcaps will start moving ahead of that,” he said.
BSE Midcap and Smallcap indices are down 18 per cent and 31 per cent, respectively, since January 2018, while the benchmark 30-share Sensex is up 20 per cent.
Wood is bullish on insurance and real estate stocks. “Insurance stocks potentially could do what private banks did in last 10 years. We also like realty stocks, which will benefit from RERA and have quality balance sheets,” he said.
Insurance players like HDFC LifeNSE 1.03 % Insurance, ICICI LombardNSE 0.95 % General Insurance, ICICI Prudential Life Insurance and SBI Life Insurance gained 48 per cent, 72 per cent, 29 per cent and 38 per cent, respectively, between January 1, 2018 and December 6, 2019. On the other hand, General Life Insurance and The New India Assurance have slipped 35 per cent and 53 per cent, respectively, in the same period.
2018年1月1日至2019年12月6日期间，HDFC LifeNSE保险公司、ICICI LombardNSE普通保险公司、ICICI保诚人寿保险公司和SBI人寿保险公司等保险公司的股价分别上涨了48%、72%、29%和38%。另一方面，同期普通人寿保险和新印度保险的股价分别下跌了35%和53%。
Wood said he is biased towards Indian corporate banks right now as bulk of their provisioning cycle is over. “NPA issues for the banking sector gradually getting over,” he said.
The Asian market veteran said India’s economic slowdown has been due to shock treatment of reforms. He called the collapse of growth this year in India as dramatic.
“Structural reforms combined with NBFC liquidity squeeze and RERA impacted growth,” he said.
The Reserve Bank of India recently lowered its growth forecast for this financial year to 5 per cent from an earlier estimate of 6.1 per cent on account of weak domestic and external demand.
Wood said demonetisation followed by the implementation of goods and services tax (GST) caused a lot of pain to small entrepreneurs. “The market will be relieved if the government accepts the slowdown and let its fiscal deficit target expands,” he said.
Commenting on global trade tensions, Wood said the US-China trade deal can trigger big flows into emerging markets. “If the US dollar peaks, then flows can continue to emerging markets.”
He said he holds no view on 2020 until there’s clarity on US-China trade deal, but said gold can do very well due to central bank policies.
译文来源：三泰虎 http://www.santaihu.com/48968.html 译者：Joyceliu
Govt. has done good for nothing in the past 6 years as far as economy is concerned the focus has been being in power And showoff worldwide hope govt. Start working on present setback faced by the economy instead of trying to convince people about the better future prospects that no one has seen.
This recipe of 'let deficit slip and grow' is a dangerous line. Not only Wood, but even MMS,Abhijit,Rajan have all suggested that. The problem is that if deficit is allowed to slip in a big way, it will unleash inflation and cause a lot of difficulties to common people. That Modi will never permit. One of the hallmark of Modi regime is low inflation. And that's why public in general is happy with Modi. We all know the cause of slower growth. It is Real Estate sector (and it's supplier industry). Real estate has traditionally thrived on black money. With black money in check to a great extent, with RERA and bankruptcy code in place and tighter bank scrutiny, Real Estate sector is feeling real pinch.This had to happen. A nation which has lived financial recklessness for too long, had to correct itself. I think Modi should stay on his path. High growth period will return, in max about one year and then it will be real growth to be proud of.
Real Estate is perverse sector . players in this segment is mafia no rules apply to them in realty . Unless Govt can enforce some discipline way forward is bumpy
unless the "subsidised" are less than 5% of those who work and produce, collapse is imminent. Stop subsidy to higher education and all but primary health care. Stop govt recruitment. Privatise. BAn unions. Link pay to performance. Make 70 hours a week work mandatory for survival.
The frauds in the banks has increased seven fold in the last five years which is a matter of serious concern.
Wait till you see the full effects of global recession affecting ALL. This is nothing. Good to collapse all the bubbles worldwide. Lets not pay for others. Jai Hind.
Till now India got only fatty growth. Now the sustained muscular strength will start.
India is just an Hindu Pakistan.Failed poor and corrupt.
only one solution to boost economy is allowing fiscal deficit by banning income tax and replacing with GST & transaction tax.
Good assessment. Mid and small businesses were used to informal ways. Big ones had been formal, but had shady dealings. As he said, it is another 4 quarters when all the working styles get adjusted to formal ways.