Mark Matthews Asia Pacific Strategist at Fox-Pitt Kelton, said.

India to grow at 7% next year and added that he was not too alarmed by the country’s state of fiscal deficit. “I was not disappointed by the budget,” he said, adding that we would shift money to India from China where he saw asset bubbles forming.

The media focuses on the good news but I would say that really it is a continuation of the theme that we had in the second quarter where the news is just less bad than it was before. I mean if you look at Intel numbers, they were still very weak. If you look at what FedEx is saying, they are guiding for basically flat throughout the remainder of this year and Singapore revised their projection for their GDP this year from minus 9% to somewhere between minus 4-6%. So it is a continuation of that trend where things are less bad than they were before. But when I look at data, I just feel it is still extremely weak. For example Singapore port and Long Beach port in California came out with their June throughput numbers and they were very weak, basically flat on month-on-month (MoM) basis and down anywhere from 17-28% on year-on-year (YoY) basis.

Now, between China and India, the big difference is that China’s growth is basically being bought by the government through their tremendous fiscal stimulus. So, China is indeed growing faster than India but it is basically fake growth. Whereas, in India, because you don’t have the same kind of tremendous surpluses, you haven’t stimulated the economy nearly as much and your growth is genuine. Yes, there is a lot of good will towards emerging markets now including China and India.

source: MC