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莫迪险胜连任后 贝莱德仍看好印度债券

BlackRock remains bullish on Indian bonds after Modi narrowly wins reelection.

Zhitong Finance ·  Jun 6 10:12

BlackRock insisted on being optimistic about Indian bonds, ignoring market concerns that India's Prime Minister Narendra Modi's narrow victory in the general election could spur populist spending.

BlackRock insisted on being optimistic about Indian bonds, ignoring market concerns that Indian Prime Minister Narendra Modi's narrow victory in the general election could spur populist spending. Neeraj Seth, BlackRock's chief investment officer and head of basic fixed income in the Asia-Pacific region, said that Modi's political party coalition is unlikely to deviate from the path of fiscal consolidation, and that cooling inflation will allow the Bank of India to begin easing monetary policy later this year.

In an interview on Wednesday, Seth said: “Actually, now is a good time to extend the longevity of India's assets. I'm not going to change my opinion because of the election results.” He said and added that he favors the more liquid 7-year and 10-year Indian bonds.

India's election results on Tuesday showed that Modi's party lost its majority in parliament. Moody's Ratings said this result could delay more profound economic reforms and hinder progress in fiscal consolidation. On Tuesday, the 10-year Indian Treasury yield soared by as much as 12 basis points, the biggest increase since October last year, and stabilized only on Wednesday.

Seth added that while expansionary spending is risky, efforts to “seriously deviate” from fiscal discipline are unlikely as Modi's coalition of political parties is still in the majority. Modi's government has taken decisive steps to control the deficit, reducing the deficit to 5.6% of gross domestic product (GDP) in the fiscal year ending March this year, and plans to further reduce it to 4.5% in the 2025-26 fiscal year.

And India's cooling inflation — consumer prices rose 4.83% recently, compared to a high of over 7% last year — supports Seth's view that the Bank of India can relax monetary policy regardless of the Federal Reserve's actions; India's monetary authority is expected to keep interest rates unchanged on Friday. “To some extent, India is one of the few economies that are not very dependent on the Federal Reserve, and so is the Bank of India,” he said.

His optimism about this asset class was shared by Standard Chartered Bank and HSBC. The two companies are concerned about favorable supply and demand dynamics due to the expectation that India's imminent inclusion in the index will bring in capital inflows. Prior to joining the J.P. Morgan Emerging Markets Index later this month, the Indian bond market had attracted $6.6 billion in foreign capital this year. “After being included in the index over the next 10 months, structured capital inflows will provide a technically positive background,” he said.

The translation is provided by third-party software.


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