Submitted by Taps Coogan on the 13th of the November 2019 to The Sounding Line.

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Mark Mobius, Mobius Capital Partners founder and emerging markets pioneer, recently spoke with CNBC-India about the outlook for global trade and the Indian economy given the US-China trade war, a slowing Indian economy, and a recent Moody’s rating downgrade of the Indian economy.

 

Some excerpts from Mark Mobius:

“You talk about a slowdown (in India). 5% growth is incredible when you think about what’s happening in other countries and even if you say ‘that’s overstated,’ let’s say its 4%. Still that’s very very good growth for a country this size…”

“Cutting the corporate tax (which India recently did) makes a lot of sense because it puts India on a level with other emerging market countries around the world and will attract more investment… Now with the trade war between China and the US, India has a good chance to pick up some of this trade and some of this manufacturing and trade that’s… coming out of China… Remember, let’s say you are manufacturing shoes in… China and you want to move to India, it’s going to take you at least a year to establish yourself and get the appropriate licenses etc… So there is going to be a delayed reaction going forward but I think this is going to happen. I am not saying it’s going to be a massive move, but you’re going to find more and more Chinese manufactures coming to India because they can’t export to the US… and also because of lower costs.”

“Multilateral trade agreements are pretty much over. In other words, the weakening of the World Trade Organization, multilateral structure is not going to be what is was previously. In other words, there is going to be more bilateral agreements, simply because Trump has finally said ‘Look it’s unfair what is happening with China and with some other countries’ and a lot of other countries are following suit. There are beginning to say ‘Wait a minute. Why do we sign this multilateral agreement that puts us in such a bad situation?’ So international trade is not going to stop, but it’s going to be at a different level.”

“(Trade conflict) is going to be ongoing. It’s not going to end at a certain date, simply because it involves not only physical trade but… all of the technology transfer issues that China and the US have, is going to be ongoing… Then you have to think of all of the strategic issues that are taking place with China expanding, with Belt and Road projects, and all kinds of investments in Africa and so forth. So the conversation or negation is going to continue for a long time.”

There is more to the discussion, so enjoy it above.

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