Investment Outlook , Published Feb 18, 2020
“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails”
– William Arthur Ward
We begin a promising new decade on a hopeful note.
To help navigate the road ahead, we present to you our `Investment Outlook 2020’ report. In it, we seek to examine several long-term socio-economic trends alongside our traditional market analysis to showcase important ideas and provide actionable insights. These are complemented, once again this year, by opinions from decision-makers and thought-leaders across different professional arenas.
The theme of this year’s report is “India as a US $5 Trillion economy”. This (unashamedly) leverages the eponymous tagline because we find it captivating in its simplicity; the best ones usually are. Perhaps for this reason, it has attracted a great deal of commentary and, undoubtedly, will continue to do so in the years ahead. As a policy goal, despite its seemingly unidimensional nature, it provides a useful anchor to explore the economic and social evolution of the country over the next few years.
The views presented in the report span several approaches to examining this milestone. From commentary on the challenges and opportunities across important sectors, to near and long-term policy prescriptions for achieving both economic and social objectives, the report captures several shades of opinion.
Overall, there appears to be strong agreement regarding India’s economic potential, but opinions on present conditions vary considerably. On the one hand, a collection of reforms aimed at a more formalised economic structure, stronger institutional mechanisms for resource allocation, and better governance, may be contributing to the creation of a more robust growth platform for the longer term (though there is much more to be done). On the other, some of these reforms have come with execution challenges and significant near-term disruptions with real economic (and human) costs. This is apparent in what almost all economic activity indicators have been showing us for several months.
Economic uncertainty, however, has not dissuaded exuberant stock market behavior that seems out of sync with the real economy. Given that market cycles typically lead business cycles, this may not be as unusual as it appears, but this will become much clearer in the months to come. What is immediately clear is that the government’s macroeconomic priorities must be to boost consumer and business sentiment, kickstart demand, and hasten the resumption of a normal lending environment.
The prospect of continued reforms, favourable demographics, and structural factors such as the US $300 billion that are added to household financial savings every year keep us feeling optimistic about the economy and financial markets in the long term. However, with elevated valuations, divergent economic and financial data, risk of rising inflation, and geopolitical fragility, the near-term carries reasonable uncertainty. Our asset allocation choices reflect this view and are detailed in the report that follows. As always, the robust implementation of a well-crafted asset allocation plan remains the best way to minimize the potential dangers of poor decision-making, especially in times of uncertainty.
We hope that the broader analyses and asset class views in this report provide you with some interesting reading and useful navigational cues for making business and investment decisions.
We have also included a special feature on navigating a path to wealth and happiness which you might enjoy reading too.
As always, our relationship managers and market specialists are available to assist you.
Thank you for your support.
About Shiv Gupta
Shiv Gupta is the Founder and CEO of Sanctum Wealth Management which was created through the acquisition of the Royal Bank of Scotland’s Private Banking business in 2016.
Over a 23-year career, Shiv has held several leadership positions in wealth management across Asia and the Middle East. His most recent position was as Head of India and Co-Head of the Middle East for the Royal Bank of Scotland’s Private Banking Business.
Shiv holds a Bachelor’s degree in Economics (Hons) from Hindu College, Delhi University. He is also a graduate of the Harvard Business School’s General Management Program (GMP).
Investment Outlook 2020