Ruchir Sharma,Head of Emerging Markets,Morgan Stanley Investment Management had a very interactive session with the audience at Express Adda in Mumbai. Some of the highlights are as follows.
*Biggest mistake that investors do is extrapolate
*West is in decline,India is the only place where you can invest
*India is so used to grow at 8-9%,that anything lower seemed like a mini recession
*Expectations are the key; India,China and Brazil will always be around
*If we create a welfare state prematurely,growth slows down
*The Indian growth story lies in the state
*The more time you spend outside mumbai and delhi,the more optimistic you feel
*More and more people are saying that it is difficult to do business in India.
*Every time a major economic crisis hits,domestic businessmen take money out first
*Domestic businessmen in emerging market are much smarter than the foreign ones
*Between 2003-07,every emerging market did exceptionally well
*India is special but mistook boom to believe that it was only for India.
*We made a lot of mistakes in 2007 while making overseas investment. We ended up buying trophies in 2007
*Government spending increasing by 15% every year will keep interest rates high
*Growing at 8-9% will be difficult for India
*Of all BRIC nations,India has the best chance to break-out
*Absence of global liquidity brought us back to 6%
*India’s acceleration in growth from 6% to 9% due to global liquidity
*Demand from commodities coming from China is slowing
*Number of billionaires coming from commodity sector is one-third of the total.
*India is culturally very similar to Brazil
*Brazil economy started falling during 1970s as they created welfare state prematurely
*China moved people from rural to urban areas,productivity tends to be higher in urban places
*Biggest surprise in the last 2-3 years has been how poorly Left has done
*Demographics are sufficient but not necessary condition for growth
*The reforms of 90s helped us in benefiting from the global boom
*We should be growing at 9-10% without much difficulty
*We need to open up further; allow FDI in retail,aviation,better labour laws; reduce govt spending
*Emerging markets do not reform until their backs are to the wall
*Last decade saw high correlation between GDP growth and stock market returns
*Having a democratic or authoritarian set-up has no bearing on performance; all depends on leadership.
*Growth rates of the southern states that were stars earlier are falling.
*Biggest surprise in the last 2-3 years has been how poorly Left has done.