We maintain our long-term positive bias on India. The stress in the shadow bank sector will eventually blow over and Prime Minister Modi still has a lot of political capital to push reform. However, while we previously sought to buy on dips, these dips now have to be deeper to entice us.
Avoiding financial crises is critical when investing in emerging markets. That’s why we developed the Country Risk Model, a general health check that helps us steer clear of economies with too many imbalances and symptoms of overheating. The model provides valuable trading signals outside full-blown crises too.