Portfolio strategist finds India better bet than China

Donald Coxe, global portfolio strategist of the BMO Financial Group, believes India has far better growth potential than China.

Coxe, whose firm opened its office in Mumbai recently, told reporters here India has the fastest growing middle class and here China will fall behind because of its single-child policy. India is insulated to the extent that its growing population will consume what it produces.

The very high savings rate could work in India’s favour, Coxe said. “India’s economic growth comes not from borrowed capital but from savers, entrepreneurs and people”. The BMO Financial Group is one of the largest diversified financial services providers in North America with more than $375 billion total assets and more than 37,000 employees.

 

Coxe, based in Chicago with roots in Rajasthan, feels the recent dip in stocks and the weakening currency will be just a temporary phenomenon as hedge funds are selling because of their problems at home.

“One should not ignore the fundamentals even at a time when negatives are exaggerated,” Coxe says.

 

COXE- SPEAK

If these four indicators are positive, it is time to buy shares Bank stocks outperform benchmark indices: If bank stocks start outperforming S&P 500 consistently for 6 weeks, crisis may be ending soon Falling VIX: Chicago’s VIX (volatility index is benchmark for volatility in stocks) is currently moving in the range of 50-70 and if it starts coming down and falls to 25, it will be a sign of stabilising markets.Decreasing TED spread: 

The spread in yields of US treasury bills and Euro-dollar should decrease further. It measures the risk in the global banking system. It has gone up to five and at present it is 1.97 and should fall another 150 basis points. That’s the time when you can be sure that the crisis is getting over.Dollar and Yen should fall: When the US and Japan are facing recession, their currencies cannot remain stronger. They are rising as deleveraging is happening in both the assets. Hedge funds are selling all assets to buy dollars and Yen carry trade is unwinding.