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nwoodman
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MS is out with an update on the Indian Economy.  A couple of graphs that may be of interest.  Chart pack attached.

 

“We expect cyclical recovery in subsequent quarters: While near-term risks have emerged due to supply-side shortages, at the margin the situation has been stable, and we expect the impact to be transitory. We expect vaccination rates to reach a critical mass by early next year, which will help in broadening the recovery, and external demand conditions remain supportive. As such we maintain our growth forecast at 10.5% for F2022e. Risks to growth outlook are balanced and stem from Covid-19 management / pace of reaching full vaccination, continued supply side disruptions which weigh on both growth and inflation negatively.”

 

 

 

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india oct 21.pdf

Edited by nwoodman
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I am optimistic on India economy recovering post-covid but market valuations look very hot in India compared to other emerging markets- a lot of Fairfax India's holdings & FFH's holdings have had large run ups over the last 12 mths - I think we should all be prepared for more volatility & downside risk but given the wide FFH/FFH India valuation discounts  IMO I am not worried so much if we see some downside here on individual holdings

https://economictimes.indiatimes.com/markets/expert-view/market-very-frothy-exit-and-take-out-some-money-now-sandip-sabharwal/articleshow/86473289.cms

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8 minutes ago, glider3834 said:

 

I am optimistic on India economy recovering post-covid but market valuations look very hot in India compared to other emerging markets- a lot of Fairfax India's holdings & FFH's holdings have had large run ups over the last 12 mths - I think we should all be prepared for more volatility & downside risk but given the wide FFH/FFH India valuation discounts  IMO I am not worried so much if we see some downside here on individual holdings

 

Agree, a good time to be taking assets public. 👍.  I haven’t come across any news on the Anchorage float perhaps they are waiting for air travel to tick up some more.

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A recent bullish piece on India by MS.  They are arguing for corporate earnings to compound 20-25% p.a. over the next 4 years.  
 

Their reasoning:

 

1. The policy intent has clearly shifted from boosting consumption via transfers to boosting growth via investments. Policymakers have been initiating reforms for a while now and we believe that the economy is now in a good position to reap the cumulative benefits from past reforms 


2. Macro stability indicators – which are symptoms of a weak productivity dynamic – are in good shape.


3. With deleveraging headwinds now behind, the global demand environment will turn much more supportive.
 

“The India story stands out now, not only from an absolute perspective but also from a relative perspective, because of this rise in the ratio of corporate profit to GDP. Our strategist for India, Ridham Desai, has been pointing out the fundamentals that will drive rising corporate profits. He notes that “with nascent signs of capex, supportive government policy for higher corporate profit share in GDP and a robust global growth outlook, India seems well placed to enter a new profit cycle. For an economy that is likely to grow at a nominal rate of 10-12% per annum, if the profit share in GDP hits 3.5% over the next five years, it gives us an annual compounded growth in earnings of ~25% for the broad market. Indeed, higher profits feed into real GDP growth and back into profits so a virtuous cycle unfolds with concomitant positive impact on share prices."

 

They explore some of the issues over the last 10 years,  sound familiar? Worth a read over the weekend, enjoy.

india - on the cusp of a virtuous cycle.pdf

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4 minutes ago, nwoodman said:

A recent bullish piece on India by MS.  They are arguing for corporate earnings to compound 20-25% p.a. over the next 4 years.  
 

Their reasoning:

 

1. The policy intent has clearly shifted from boosting consumption via transfers to boosting growth via investments. Policymakers have been initiating reforms for a while now and we believe that the economy is now in a good position to reap the cumulative benefits from past reforms 


2. Macro stability indicators – which are symptoms of a weak productivity dynamic – are in good shape.


3. With deleveraging headwinds now behind, the global demand environment will turn much more supportive.
 

“The India story stands out now, not only from an absolute perspective but also from a relative perspective, because of this rise in the ratio of corporate profit to GDP. Our strategist for India, Ridham Desai, has been pointing out the fundamentals that will drive rising corporate profits. He notes that “with nascent signs of capex, supportive government policy for higher corporate profit share in GDP and a robust global growth outlook, India seems well placed to enter a new profit cycle. For an economy that is likely to grow at a nominal rate of 10-12% per annum, if the profit share in GDP hits 3.5% over the next five years, it gives us an annual compounded growth in earnings of ~25% for the broad market. Indeed, higher profits feed into real GDP growth and back into profits so a virtuous cycle unfolds with concomitant positive impact on share prices."

 

They explore some of the issues over the last 10 years,  sound familiar? Worth a read over the weekend, enjoy.

india - on the cusp of a virtuous cycle.pdf 447.35 kB · 0 downloads

thanks nwoodman

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  • 1 month later...

1. FWIW, MS India snapshot attached. Air traffic continues to pick up.

 

“We expect recovery to gather further strength from 1Q22 as we expect vaccination rates to reach a critical mass by early next year, which will help in broadening the recovery, and external demand conditions remain supportive. As such we expect growth at 10.3% in F2022 and 7.8% in F2023. Risks to growth outlook are balanced and stem from Covid-19 management / pace of reaching full vaccination, continued supply side disruptions which weigh on both growth and inflation negatively.

 

2. A short article on Akasa, India’s new low cost carrier based at Fairfax’s Bangalore Airport.  They just pulled the trigger on 72 Boeing 737 Max at the Dubai Airshow. 
 

https://www.businessinsider.com.au/ultra-low-cost-airline-akasa-air-entire-aviation-segment-2021-11?r=US&IR=T

india_20211121_0000.pdf

Edited by nwoodman
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  • 3 weeks later...

https://www.livewiremarkets.com/wires/what-you-need-to-know-about-india-s-structural-growth-story

 

We maintain a very positive view on India’s long-term structural growth prospects. This is because the country has strong demographics — its 1.4 billion population is not only behind China, but younger (with a median age of 28 years) and growing more rapidly.

India is expected to add 200 million people to its workforce between 2020 and 2050. As these extra hands join the workforce, they will contribute to GDP growth as well as add to the country’s consumer base.

Also, India has one of the lowest penetration of goods and services such as automobiles, white goods, electronic devices and services such as mortgages, credit cards and online travel.

Edited by glider3834
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  • 3 months later...

The following article suggests India’s position may be improved by the current crisis but they can’t overplay their hand.

 

India’s value as a democracy and capacity as the only other military power able to push back against Chinese aggression in Asia is not lost on the Quad. But a lot will depend on how well India — more nimble under Modi — articulates its position on Ukraine.  

 

“India is today in an enviable position because of years of careful diplomacy, and fortuitous geo-politics,” Aparna Pande, a South Asia expert at the Hudson Institute, a Washington DC think tank, told CNBC.

“The US and its partners — in Europe and Asia — need India on their side in the long-term peer competition with China. They are, therefore, more understanding of India’s predicament.”

 

But Pande cautioned that India’s reluctance, as a democracy and as a key member of the Indo-Pacific to support the liberal international order will be remembered. 

 

India faces a stark choice, said Bruce Bennett from the Rand Corporation, a think tank headquartered in Santa Monica, California.

“The key question is whether India will want to be known as a principled country or a nationalistic country. A principled country stands up against any violation of national boundaries, whether it is Russia invading the Ukraine or China invading parts of India,” he said.

 

“If India decides to ‘sit on the fence’ to maximize its national leverage and influence, I think many people around the world will lose sympathy for India’s concerns about its own territorial integrity.”

 

https://www.cnbc.com/2022/03/24/india-is-in-a-sweet-spot-courted-by-the-quad-china-and-russia.html

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  • 5 months later...

It looks like India will be a big winner as companies shift production from China. Apple doing this is a very big deal. 

—————

Apple Inc may make one out of four iPhones in India by 2025, JPMorgan analysts said on Wednesday, as the tech giant moves some production away from China, amid mounting geopolitical tensions and strict COVID-19 lockdowns in the country.

The brokerage expects Apple to move about 5% of iPhone 14 production from late 2022 to India, which is the world's second-biggest smartphone market after China.

It is also estimating about 25% of all Apple products, including Mac, iPad, Apple Watch and AirPods, to be manufactured outside China by 2025 from 5% currently.

 

https://www.business-standard.com/article/international/apple-may-move-a-quarter-of-iphone-production-to-india-by-2025-jpmorgan-122092100786_1.html

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