Modi-Led BJP Set To Take Charge Of Gujarat Again, Says CLSA’s Chris Wood
CLSA’s Chris Wood says affordable housing is the most straightforward bull story in Asia.
The Narendra Modi-Led Bharatiya Janata Party is likely to win the assembly election in Gujarat for the sixth consecutive time though its majority may decline from the last poll held in 2012, according to CLSA’s Chris Wood.
The opposition Congress party has committed a strategic blunder by “fighting the campaign on the national issues such as GST and demonetisation”, Wood wrote in his weekly newsletter, Greed & Fear report. Despite the short-term pain caused by GST, Modi remains extremely popular, the report said.
The opposition would have been better advised to have campaigned on local issues where an incumbent chief minister who is not Modi would be vulnerable.CLSA’s Greed and Fear Report
The teething issues arising from the Goods and Services Tax will be sorted in the next six to twelve months, CLSA said. Hence, investors should focus on the long-term benefits and ignore the short-term noise, added Wood.
If his position is well cemented, Modi is likely to shift his attention, for the rest of the first term, towards job creation in the next 18 months. The ramp up of affordable housing policy will be “by far the most important” area for job growth. The other areas where jobs are expected to be generated are road building and textile, the report said.
In fact, the housing and infrastructure sector will drive economic activity in India for the next 18 months, even if private sector investment “remains some way off”, Wood said in his report.
Affordable housing in India remains one of the most straightforward bull stories in Asian equities. However, a pick up on the ground in affordable housing may not become really visible till late 2018.CLSA’s Greed and Fear Report
The ramp up is definitely coming, Wood believes, and advises that investors should look to buy any pullback in stocks geared to affordable housing.
On the country’s monetary policy, Wood expects further interest rate cuts by the Reserve Bank of India next year. Which means the 10-year sovereign bond "has now become an interesting investment again", he added.