homeeconomy NewsDigitisation and manufacturing now driving emerging markets including India: Morgan Stanley
Digitisation and manufacturing now driving emerging markets including India: Morgan Stanley
Jitania Kandhari, Head of Macro Research for Emerging Markets at Morgan Stanley in an interview with CNBC-TV18 said that digitisation and manufacturing are driving emerging markets (EMs), including India, forward.
India has always been a service-led economy but of late the manufacturing sector has started shifting gears. Jitania Kandhari, Head of Macro Research for Emerging Markets at Morgan Stanley in an interview with CNBC-TV18 said that digitisation and manufacturing are driving emerging markets (EMs), including India, forward.
“The four structural drivers are reform momentum, the commodity cycle, digitisation, which is a big growth driver in many emerging markets, and manufacturing, because of the supply chain diversion is happening in the geopolitical world with China in focus,” she said.
“I'm really very positive on India at a relative level. India has never been a manufacturing story. It missed the manufacturing bus... This time, I am beginning to see some signs of a manufacturing pickup with the supply chain diversion. I'm hoping that the long-awaited manufacturing pickup will happen,” she said.
According to a Morgan Stanley report, for the first time inflation levels in EMs are far lower than that in developed markets like the US and Europe. This means emerging market central banks don't have to hike rates as much as developed markets.
Kandhari believes inflation in EMs is not a demand-led structural problem. “Wages are not an issue for inflation. The supply-related issues which have the food, energy prices or the supply disruption, that has caused inflation to peak in some of these markets,” she said.
Can India demand a greater share of the MSCI EM index as this index morphs?
“I don't know if it will go to 30 percent but I am sure the trend is up. There are risks. So we are very conscious. It is a very expensive market, but the valuations have gone up with earnings going up and return on equity going up. Now, if that were to change for any reason, there will be a derating. So this is not going to be a straight line up like everything else, we will be up and down but I think the structural trend is up,” she explained.
For the full interview, watch the accompanying video
(Edited by : Abhishek Jha)
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