China and India: Who is hot in 2006? What do investment banks think?
Most investment banks have already released their forecast of GDP growth rates for India and China. Let’s see what they think about these two competitors’ prospects in 2006.
I find only three major investment banks that have released forecasts on both countries. They are Deutsche Bank, Citigroup, and Morgan Stanley.
Deutsche Bank always has no preference!
Deutsche Bank forecasts that China’s GDP will grow at 9% in year 2006, while India will grow at 6.9%. This creates a 2.1% growth gap. Both numbers are almost the same as the consensus in the market. This is not the first time; I have to mention that last year DB did the same thing. DB always agrees with the consensus view!
Citigroup loves Indian foods!
Citigroup however thinks the gap should be smaller. Citi predicts that China will grow at 8.7%, while India at 8.1%, which produces a merely 0.6% gap compared to DB’s 2.1%. I have to mention that Citi’s 8.1% forecast of India's year 2006 GDP growth is the highest among all major IBs. Their forecast of 7.5% for last year also was the highest. Citi does love Indian foods!
Morgan Stanley does not like Asian foods!
Interestingly, Morgan Stanly is very pessimistic about both India and China. Morgan Stanley thinks China will grow at only 7.8% while India at 6.6%. Among all major forecasters who have released numbers for China and India, Morgan Stanley’s forecast is the lowest. Last year MS also was the most pessimistic about the two countries, and missed the target by wide margin. They must have some private information and hard evidence backing their persistent opinion. I will try to find it out and share with readers in the next weeks.
Credit Suisse, Goldman Sachs, and BNP Paribas loves Chinese foods!
Finally, Credit Suisse, Goldman Sachs, and BNP Paribas are quite optimistic about China. They think China will grow at 10.1%, 9.6%, 9.5%, respectively, in year 2006.
Well, it is always to interesting to reexamine at the end of year 2006 how accurate their bets were. Please do remind me to do that.
Some reference readings on investment banks' views on China vs. India:
Morgan Stanley's Report: Indian and China: a special economic analysis
Deutsche Bank's Report: China and India Chartbook: a visual essay
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