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Asia Tea Time - Cup 59 ☕

This week I talk India’s general election, reviewing those sneaky subscriptions, and high-speed sleeper trains from Hong Kong to Beijing/Shanghai.

Macro in Asia

India’s general election throws up a surprise result for markets

In India’s general election, the ruling Bharatiya Janata Party (BJP) won 240 seats in the legislature (short of a majority) and formed a new government led by its incumbent Prime Minister Narendra Modi.

Markets were expecting a landslide win for the BJP heading into the week but exit polls turned out to be wide of the mark.

Why it’s happening

  • While there are some big elections in 2024, India’s democracy is the biggest in the world. Heading for a third consecutive term, Prime Minister Modi’s BJP was expected to win big during the election.
  • The ruling BJP has generally been seen as being more right-wing and Hindu-nationalist in recent years – a shift that understandably hasn’t gone down well with the nearly 300 million Indians who aren’t Hindu.
  • Higher inflation and unemployment in India since the end of the Covid-19 pandemic has also dented support for both Modi and the BJP.

Why it matters

  • With a more fragile 15-member coalition, Prime Minister Modi and his BJP may not be able to push through some of the more ambitious reforms they have in mind.
  • The BJP losing the large northern state of Uttar Pradesh (UP) was a massive blow. It had won easily in UP in 2019 and 2014 but suffered at the polls this time from the economic malaise that many voters are experiencing.
  • India’s stock markets have been red-hot so any political upset could potentially throw a spanner in the works for continued growth in corporate earnings.

What’s next?

  • It will be interesting to see if Prime Minister Modi and the BJP have their ultra-nationalist tendencies tempered by this humbling election outcome.

Tim’s Take 

India’s general elections are a notoriously complicated and lengthy affair – taking place over six weeks.  

However, what the latest election outcome prove more than anything is that polls can’t be trusted.

Heading into the final week, the thought of Modi not winning by a landslide seemed to be incomprehensible. Indeed, all the major exit polls were pointing towards that outcome on Monday (3 June).

The only problem was that the opposition Congress party ended up doing much better than expected – albeit they had pretty low expectations to begin with.

Yet it ended up feeling more like a loss for the BJP and a win for Congress given the expectations. Falling 32 seats short of a majority, the BJP will now need to be much more willing to compromise to get reforms through.

That could be a good thing for the country in the longer term given the overall obsession with the personality and gravitas of PM Modi.

Indeed, stock markets in India rallied hard on Monday before crashing back down on news that the BJP wouldn’t win a majority. But by the end of the week, they were slightly above where they started it.

It’s a timely reminder that forecasting politics and elections is just as futile as forecasting the short-term movements of markets.

Tim's money tip of the week

While $10 here or $20 there might not feel like a lot, it can add up. And that’s just how monthly subscriptions can eat into our cash flow. 

Most of us likely have at least one video streaming service but do some of us have two? Is the second one really necessary?

It’s always useful to have a regular “cash flow review” to see where you’re spending your monthly subs on. Is every subscription really worth it?

Or have we even forgotten that we’ve still got one for certain services that we both never use and never got round to cancelling?

By getting into the habit of regularly checking where those dollars are flowing, we can potentially be more discerning on which future purchases we’ll utilise – thereby saving us some cash in the process. 

Story of the week

It was announced this week that high-speed sleeper trains running from Hong Kong to Beijing and Shanghai would start service on 15 June.

It will cut the travel time in half, with the time to Beijing estimated to be 12.5 hours and 11 hours 14 minutes to Shanghai.

The overnight trains will help travellers between the cities save on hotel costs as well as travel time.

The service is also testament to the success of China’s rapid buildout of its high-speed rail network.