Insights on the 2019 Indian Election | EMQQ
Since the results of
India’s election were determined, the Indian stock market, as measured by the
BSE Sensex, has advanced by over 7%. Narendra Modi, the Bharatiya Janata
Party candidate, was elected for a second term as Prime Minister. The stock
market’s advance seems to be signalling the hopes of investors that Mr. Modi
will continue the path of economic reforms designed to make the Indian economy
more competitive and rev up economic growth.
With the election results determined, what may Mr.
Modi’s election mean for India?
Modi the Reformer
Modi’s sweep in the
2014 elections was based on a platform of development. His slogan was “Sabka
Saath, Sabka Vikas,” or “inclusive growth through collective effort.” He
promised to wipe out corruption, improve infrastructure, and boost the economy. His
success at realising these goals has not been stellar, according to the
And His Westward Focus
A recent Wall Street
Journal article dubbed Mr. Modi as India’s first openly pro-American head of
The article went on to note that he has visited the United States three times
in the past five years, urged President Trump to visit India, hobnobs with
American billionaires such as Bill Gates and Mark Zuckerberg, and loves
Twitter. The two countries also share concerns surrounding Islamic
terrorism and the growth of China.
Versus Modi the Populist
However, with the
most recent election, Mr. Modi and his party have taken a more populist view.
During this campaign, they spoke less about development, jobs and reform and
more about the issues that resonate with Hindu nationalists including banning
the slaughter of cows, a crackdown on illegal immigrants, many of whom are Muslim,
and ending special treatment for the country’s huge Muslim population, which
makes up about 14% of the country, according to the Wall Street Journal.
And the Less Tolerant
There is concern
about intolerance toward practices which offend Hindu activists. The Wall
Street Journal pointed out that there is increasing suppression of speech, and
an ugly relegation of religious minorities to a politically and socially
subordinate status and a brazen shift toward radical Hinduism.
Which Modi Will Rule?
Recent stock market
action may imply that many feel that Mr. Modi will ride his momentum to roll
out the tough economic changes that India needs to produce strong economic
growth and provide employment for the millions of young people entering the
work force. In fact, the Wall Street Journal highlighted that many feel
Mr. Modi was riding the populist wave in an effort to get reelected and now
that he has, he will turn his attention back to economic reform.
Mr. Modi is liked by
foreign investors for his efforts to streamline the economy, including a new
nationwide goods and services tax, replacing some government subsidies with
direct cash transfers and a new bankruptcy code, according to the Wall Street
Journal. More reforms are likely to occur and may be enough to propel the
Indian economy and, subsequently, Indian stocks higher. But, it may not
be radical enough for some.
The Emerging Markets Internet & Ecommerce UCITS ETF (EMQQ)
EMQQ has direct exposure to some Indian stocks such
as MakeMyTrip LTD (MMYT). The fund also
has indirect exposure to India through companies which have internet and
ecommerce interests in India.
As of 28th June 2019, the Emerging Markets Internet & Ecommerce UCITS ETF (EMQQ) held 0.56% of its weight in MakeMyTrip LTD.
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