Having exited our China A share equity position, we are rotating directly back to ... India.

Why? Because the local economy is absolutely booming, with our own growth proxy index now pointing to real growth of 11% y/y and an explosive surge in the credit cycle. This boom has not yet shown up in corporate earnings, but in our view it is simply a matter of time before profits follow suit and we are thus bullish once again on equities.

The main issue, as before, is the rupee, as widening trade imbalances are indeed likely to keep the currency on the back foot. However, measuring potential gains on earnings and share prices at home vs. potential FX weakness abroad we still feel confident in buying today. Wish us luck.