In this Cambridge House Live interview with Bridget Anderson at the Canadian Investor Conference in Vancouver, I discuss the market euphoria around Narendra Modi’s election as India’s new prime minister.

I argue that investors are expecting too much from one politician. India’s problems are much deeper than policy announcements, and they cannot be fixed by a single leader, however decisive he may appear.

Watch the full discussion below:

Key Takeaways

• Indian markets were reacting euphorically to Modi’s election, with both the stock market and rupee strengthening sharply.
• I argue that expecting one politician to transform a country of 1.25 billion people is unrealistic.
• India’s entrenched bureaucracy, corruption, and social structure cannot be changed merely by policy declarations.
• I am skeptical of the idea that Modi can function as a magic wand for India’s economy.
• I discuss concerns about Hindu nationalism and the political pressures Modi may face from his support base.
• Gold in India was trading at a lower premium than before, partly because the market expected import restrictions to be relaxed.
• Indian demand for gold and silver remained strong, though some buyers were waiting for lower premiums.
• I remain much more optimistic about China, Hong Kong, Singapore, and the rest of Asia than about India.