2020 European Equity Outlook
Brian Bandsma discusses India’s slowdown, companies impacted by the trade dispute, redirection of global supply chains, and country rhetoric around trade and technology.
India’s GDP growth has decelerated to its lowest rate over the last six years. The slowdown is partly due to failures in non-bank financial companies, which have been responsible for about 30% of the incremental loan growth in India. A resulting downward cycle has created structural issues in the financial sector. But growth should continue and, because India has very little direct ties to the global supply chain, it should be less impacted by the US- China trade dispute.
Companies directly affected by the trade war view an over reliance on China for their supply base as a business risk. But the issue for those companies seeking to diversify their supply chains outside of China is that this change will be very gradual. For example, in industries such as consumer electronics, companies can easily prototype a new piece of hardware within 24 hours in China – tariffs will not change this overnight.