From the Telegraph:
Goldman Sachs has issued a short-term alert on China and India as inflation rears its ugly head, advising clients to rotate into Wall Street and Old World bourses as a safer bet over coming months.
"We're not as tactically positive on the BRICs as we have been," said Tim Moe, the bank's chief Asia-Pacific strategist, referring to the quartet of Brazil, Russia, India, and China.
"To be frank, we may have held on too long to our overweight position in China last year. We have decided that discretion is the better part of valour and have tactically reduced our weight. Asia is not in the sweet part of the cycle. The longer-term picture of Asia outperforming the US is taking a breather," he said, speaking at a Goldman conference in London.
The cooling ardour for China is significant shift for the bank that invented the term BRICs and has been the cheerleader of the emerging market story over the past decade.India is an even bigger worry, with yawning twin deficits, and overheating visible on all fronts. The nation's central bank warned this week of "surging inflation".
"India's current account deficit is running at a record pace of 4.1pc of GDP and it is 100pc funded by short-term portfolio flows, which cannot be relied on indefinitely," said Mr Moe, describing Mumbai's bourse as "crowded"....MORE