Investors Will Now Assume Modi’s Victory In 2019: CLSA’s Chris Wood
BJP’s UP victory is a remarkable personal achievement for Modi: CLSA
A landslide election victory for Prime Minister Narendra Modi-led Bharatiya Janata Party (BJP) in Uttar Pradesh means investors will expect a similar show in the 2019 general election, according to CLSA’s Chief Equity Strategist Christopher Wood.
The win is a remarkable personal achievement for Modi, who is being hailed as the most powerful leader in India since Indira Gandhi, Wood wrote in a note titled ‘Greed and Fear’. Modi is “certainly the most successful political leader in the world today”, Wood said in the note.
The BJP won 312 of the 403 seats in the Uttar Pradesh Assembly, which will help the party push forward its economic reform agenda and enter the 2019 polls as favourites.
It also makes it more likely that the BJP will in due course gain control of the Upper House of the legislature though this process will take time.Christopher Wood, Chief Equity Strategist, CLSA
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While demonetisation worked in Modi’s favour despite criticism, Aadhaar-based payment of subsidies and bank accounts for all suggest that the “common man may be starting to see the benefits of Modi’s policies in his pocket”.
India remains by far the most interesting long-term equity story in Asia and the emerging markets in general.Christopher Wood, Chief Equity Strategist, CLSA
Renewed weakness in oil prices over the past week is also a positive for India, said Wood.
However, there is no sign of a new investment cycle and it is not expected to kick off in the next financial year due to continued overhang of stressed loans in the banking sector, he added.
It increasingly looks like the Modi government’s strategy is to leave the state-owned banks to address their problems by natural attrition.Christopher Wood, Chief Equity Strategist, CLSA
This could play in favour of private-sector lenders and help them grow their market share, the note said.