Tight monetary policy, NPL woes hurt investment cycle: CLSA

Chris Wood, CLSA said Greed & fear still remained overweight both India & China. In the case of India, it is clear that relatively tight monetary policy remains one reason for the continuing failure of the investment cycle to pick up, he believes.

But it is also evident, as discussed recently that another reason is the legacy non-performing loan (NPL) issue in the state-owned part of the banking sector & the continuing failure to recapitalise those state-owned banks, Wood said.

He further said this is why monetary easing alone is probably not a sufficient condition for a new investment cycle in India. It is also why hopes for an upturn in investment are, unfortunately, for now unhealthily dependent on increased government spending, he feels.