Morgan Stanley’s top analyst in Asia isn’t particularly bullish on India in 2010.
Jonathan Garner, the firm’s chief Asian and emerging market equity strategist, sees three key risks to foreign investment in India in 2011.
- Rising commodity prices
- Rising agricultural prices
- Rising metals prices
Or, put more simply, price inflation. All of these rising prices can add up and hit revenues.
As more investors cool on hot emerging markets, Garner sees money flowing back to developed markets, like the U.S.
In order to avoid a slowdown next year, Garner says India need to invest more in its infrastructure.
Earlier this month Nouriel Roubini declared that India is likely to outpace China in the next decade but he also warned of the impact of restricted foreign investments on the country’s economic growth. After an impressive 9.7% growth rate in 2010, India is looking at a projected 8.4% growth rate in 2011.
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