Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

PK Basu has 34 years experience covering Asia's economies and markets (equities, fixed income and currencies), including 20 years covering the global economy. He was Chief Economist (SE Asia & India) at Credit Suisse First Boston for 5 years, and Chief Asia (x-Jpn) Economist at Daiwa Securities for a similar period. Among other roles, he was global head of research at Maybank Kim Eng, Malaysia equity research head and chief ASEAN economist at Macquarie, Chief Economist at ICICI Securities, ASEAN economist at UBS and the first chief economist at Khazanah Nasional (where he was co-head of research, and led all agri-business initiatives). PK Basu started his career in the Asia Service of WEFA (Wharton Econometrics) in Philadelphia in 1990, rising to be Director of their Asia Service in June 1994. 
PK's book, "Asia Reborn: A continent rises from the ravages of Colonialism and War to a New Dynamism" won the Tata Literature First Book Award (non-fiction) for 2018. It is the first single chronicle of the modern economic and political history of the whole of Asia (from Iraq and Turkey to Korea and Japan, and everything in between), told from an Asian perspective.

Chief Economist & Political Strategist

REAL-Economics.com

Macroeconomics

With the current account set to swing to a surplus this year, and FDI inflows robust, the Indian rupee will outperform EM currencies. Although interest rates are set to decline, current yields are very attractive relative to forwards, and we would be long INR. Exports are rebounding, led by engineering goods, cars, and garments, so the current account surplus should widen next year. We are bullish the Indian economy, but would advise staying Underweight India equities on valuation grounds.India's CPI inflation rate is at its lowest in 6 years, and set to moderate further as a strong monsoon harvest arrives in November. Consequently, we expect the policy rate (already down by 175bp since the start of 2015) to decline a further 100bp over the course of the next 12 months. Nonetheless, we expect the Indian equity market to decline by about 10% in the final 6 weeks of 2016, because trailing P/Es (already stretched at 21x) will be even higher by next month as rising urban wages continue to exert downward pressure on corporate profit margins.As fund managers begin to look at 2017 prospects anew at the start of the year, India will loom as very attractive again. With farm and urban incomes rising, private consumption will strengthen, and lower interest rates and better export prospects will allow fixed-investment spending to begin rebounding as well. When coupled with exports benefiting from a rebounding US economy (with some collateral benefits for the rest of the world, including Europe), India will be primed for 8.5% real GDP growth in 2017/18. Add lower domestic interest rates, and India should become an investor's darling once more.

With the current account set to swing to a surplus this year, and FDI inflows robust, the Indian rupee will outperform EM currencies. Although interest rates are set to decline, current yields are very attractive relative to forwards, and we would be long INR. Exports are rebounding, led by engineering goods, cars, and garments, so the current account surplus should widen next year. We are bullish the Indian economy, but would advise staying Underweight India equities on valuation grounds.India's CPI inflation rate is at its lowest in 6 years, and set to moderate further as a strong monsoon harvest arrives in November. Consequently, we expect the policy rate (already down by 175bp since the start of 2015) to decline a further 100bp over the course of the next 12 months. Nonetheless, we expect the Indian equity market to decline by about 10% in the final 6 weeks of 2016, because trailing P/Es (already stretched at 21x) will be even higher by next month as rising urban wages continue to exert downward pressure on corporate profit margins.As fund managers begin to look at 2017 prospects anew at the start of the year, India will loom as very attractive again. With farm and urban incomes rising, private consumption will strengthen, and lower interest rates and better export prospects will allow fixed-investment spending to begin rebounding as well. When coupled with exports benefiting from a rebounding US economy (with some collateral benefits for the rest of the world, including Europe), India will be primed for 8.5% real GDP growth in 2017/18. Add lower domestic interest rates, and India should become an investor's darling once more.  

Exports Add to Cyclical Momentum, but Valuations Are Stretched