August 12, 2015 / 8:38 AM / 2 years ago

BUZZ-View from the buyside: Competitive yuan devaluation will be bad for India - Tata AMC

** If China's long-term policy is "competitive devaluation" then it is bad news for India, says Ritesh Jain, chief investment officer at Tata Asset Management Ltd

** Says in a weak global economy, it will take a lot more than a 1.9 pct devaluation to jump-start sagging Chinese exports

** Adds a cheaper yuan will increase competition from cheaper Chinese exports to India and the rest of the world in an already muted industrial activity scenario

** Weakness in capital goods and property market denting India's capex recovery

** Especially in the metal sector, this means even higher imports from China in an industry already reeling from low capacity utilisation levels and high debt, Jain says

** May also have dominion effect on the already weak asset quality of the lenders, especially public sector banks as most of them have high exposure to the commodity sector

** China lets yuan fall further, fuels fears of currency war

** This sudden macro development also complicates matters for the RBI governor as far as interest rates are concerned

** India stocks: walking a fine line as bears sniff an opportunity (RM: abhishek.vishnoi.thomsonreuters.com@reuters.net)

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