There are winners and losers from the oil price plunge; but which sharemarkets will gain a little advantage

Pendal Group

Pendal Group

There are winners and losers from the oil price plunge; but which sharemarkets will gain a little advantage? A $US50/ barrel fall in the oil price will save Turkey $US12.1 billion a year in import costs while India will save $US49.3 billion. While these raw numbers are starkly different, this equates to a more comparable 1.5% of Turkey's GDP and 2.6% of India's GDP. This is excellent news for both Turkish and Indian assets, but we remain heavily exposed to Indian equities while we have no holdings in Turkish stocks at all. Why? Evaluating the aptitude of a country's key decision makers is essential when considering investment positions - particularly over the long-term. Reforms previously considered impossible in India are being delivered by newly-elected Prime Minister Modi, who is backed by one of the world's best central bank governors, Raghuram Rajan. By comparison, new Turkish administration may cut interest rates despite sticky high inflation and a weakening currency. The downside for all Turkish assets could be significant. Why else do we favour India? More from James Syme here (VIEW LINK)


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