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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: dot Com, the Radio plus Mobile Act and on your radio.

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pellet, dal the SMP NEZDAK. They are all rallying.

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Speaker 1: SMP five hundred indecks, jumping the most in four weeks

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Speaker 1: after the latest polls showed the UK campaign to remain

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Speaker 1: in the European Union is gaining ground ahead of Thursday's referendum.

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Speaker 1: SMP up nineteen to two thousand ninet. He want to

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Speaker 1: gain there of one percent. Naz stack up sixty, a

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Speaker 1: gain of one point three percent down industrials up one

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Speaker 1: d ninety, a gain of one point one percent. The

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Speaker 1: tenure down eighteen thirty seconds. That yield one point six

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Speaker 1: six percent gold down to night. He the ounced to

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Speaker 1: twelve nine. He want to drop there of two tenths

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Speaker 1: of one percent. Crude oil holding above forty nine dollars

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Speaker 1: of barrel up a dollar twenty right now. West Texas

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Speaker 1: Intermediate up by two and a half percent. I'm Charlie Pellet,

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Speaker 1: and that a Bloomberg Business flash. This is taking stock

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Speaker 1: with pim Box and kapolne Hays on Bloomberg Radio. India's

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Speaker 1: a sent Sex stock index gained nearly one percent today.

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Speaker 1: This follows easing of government's rules regarding foreign direct investment restrictions. Also,

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Speaker 1: this follows news over the weekend that the injury, India's

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Speaker 1: Central Bank governor will step down when his term ends

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Speaker 1: in September. Here to tell us more about India and

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Speaker 1: other emerging markets is Jeffrey Dennis. He is the head

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Speaker 1: of Global Emerging Markets Strategy from UBS Securities. Jeffrey, thank

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Speaker 1: you very much for being with us. Give us your

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Speaker 1: take on what has happened in India. The announcement, as

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Speaker 1: I said, of the governor of the Central Bank announcing

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Speaker 1: he would be stepping down, and then these changes in

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Speaker 1: direct foreign direct investments, well, certainly the announcement that Mr

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Speaker 1: Rojan is stepping down was negative surprise. Markets attorney been

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Speaker 1: trying to anticipate whether his term would be renewed when

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Speaker 1: it ended in September. But I think the unbalanced people

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Speaker 1: thought he probably would retain his position, and so his

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Speaker 1: decision to leave, I think is definitely a negative for

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Speaker 1: the market and in fact in our Asian strategy portfolio.

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Speaker 1: Today in my colleague out cut India back to neutral.

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Speaker 1: So we're taking a more defensive line on India in

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Speaker 1: the short term while we see who replaces Mr John

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Speaker 1: and will there be any let up in what has

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Speaker 1: been a very effective polity in India of being pretty

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Speaker 1: tight on monetary policy so you can get inflation down

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Speaker 1: and then of course ultimately interest rates down as well,

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Speaker 1: so it's negative. With any question, Jef, I'd like to

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Speaker 1: ask you about this because it's surprising to be a

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Speaker 1: couple of weeks ago, um Rabu Rajon indicated that I

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Speaker 1: don't necessarily want a second term past the three years

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Speaker 1: because prominent politicians close to Modi have been beating up

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Speaker 1: on him. Oh you're you're too tough on inflation, you

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Speaker 1: need to cut rates. And then Moody uh, he wanted

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Speaker 1: uh rag Ragen to stay just let them beat up

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Speaker 1: on him. And this is the same rag Ragan who

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Speaker 1: left the University of Chicago Boost School of Business to

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Speaker 1: go back home to India and help them out at

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Speaker 1: a time right inflation was high, the rupee was falling.

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Speaker 1: He's made a huge difference. He's the same Rau Rajan

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Speaker 1: okave the speech in Jackson Hall Wyoming in August of

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Speaker 1: two thousand six, basically warning that there are pressures brewing

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Speaker 1: that could bring down the financial system, which nobody listened to.

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Speaker 1: So this is a man of great accomplishment. Why has

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Speaker 1: Mody not stepped in to ask Ragen to stay? Um,

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Speaker 1: it's not castling that he didn't step in to ask

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Speaker 1: him to stay. He may well have asked him to stay.

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Speaker 1: And I think this looks like the city of royster

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Speaker 1: rajan itself himself to to not seek another term. And

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Speaker 1: that may well be because of the continuous um uh,

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Speaker 1: you know, criticism and sniping that has gone on form

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Speaker 1: not from Mr Mody per se, but were the members

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Speaker 1: of the of the government who may have just had

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Speaker 1: enough with that. So I think if if Moody had

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Speaker 1: come to him as Theremonid comes to him and said, look,

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Speaker 1: we really want you to stay, I think you probably

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Speaker 1: would have stayed. So um it reminds me a little

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Speaker 1: bit of when Volka La La, you know, left the

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Speaker 1: Federal Reserve and at seven nobody quite knew his his

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Speaker 1: decision or or at the time President Reagan's decision. I

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Speaker 1: think it's a little bit of an uncertainty. But Net

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Speaker 1: and Nets this was a surprise. I think we all

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Speaker 1: felt on balance the chances of where he would have.

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Speaker 1: As another term, it's a negative this indeed, as you

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Speaker 1: rightly saying, this is a very talented guy, who is

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Speaker 1: highly regarded, who's probably going to go onto other senior

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Speaker 1: positions in global chinance eventually, and his loss to the

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Speaker 1: center Bank unity is big. We just did to see

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Speaker 1: what policy is going to look like with his replacements. Jeffrey,

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Speaker 1: what about the change in government policy about foreign direct investment?

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Speaker 1: For example, Apple may be able to open their own

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Speaker 1: stores as a result of these change I mean this

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Speaker 1: is an ongoing process. Clearly, part of the key part

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Speaker 1: of the government's reform program is grantually to loosen up

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Speaker 1: the foreign direct investment rules in various sectors. It's been

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Speaker 1: a stop style process. As you'll know that there's been

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Speaker 1: great disappointment about the great disporce, some dis some way

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Speaker 1: about the speed of the overall reform program, and there

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Speaker 1: has been some stopping and starting previously, including for example,

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Speaker 1: with respect of FDI going into the retail sector, into

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Speaker 1: an insurance sector. I think you'll simply argue this is

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Speaker 1: another brick in the wall, if you like, of opening

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Speaker 1: up India to foreign money as it becomes more competitive,

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Speaker 1: as therefore its internal growth rate should improve. It's a

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Speaker 1: good piece of news and timed on the day of

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Speaker 1: Mr Roger's departure or that announcement. Anyway, I think that's

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Speaker 1: a pretty good piece of timing because you should view

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Speaker 1: it as as a positivelopment the India story generally. But

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Speaker 1: it's uh, it's I think it's not new at such.

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Speaker 1: It's just part of a process that's been ongoing for

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Speaker 1: a while. In other words, I think you're implying as

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Speaker 1: a perhaps the government wanted to put out some piece

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Speaker 1: in is because having Ragi Raj and say I'm washing

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Speaker 1: my hands of this, I'm leaving has affected the routebe

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Speaker 1: the ruby has bounded amounts back a bit. You even

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Speaker 1: said you've got more defensive on India, and you've said

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Speaker 1: on this show in the past, Jeff, as have others,

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Speaker 1: that India is your favorite emerging market investment donation. Well,

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Speaker 1: I mean, I think it still is a great place

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Speaker 1: to invest in in the long term. We're just merely

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Speaker 1: saying that we want to just sit back and observe

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Speaker 1: a little bit take more of a tactically cautious view

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Speaker 1: in the short term to see to what extent polity

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Speaker 1: could change. In other ways, if you would see in

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Speaker 1: the short term growth being pumped up by sacrificing um,

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Speaker 1: a tough monitory policy that gets inflation and the cost

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Speaker 1: of cappel interest right down. In the long term, I

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Speaker 1: think we would consider that that to be a negative.

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Speaker 1: But certainly it's a tad kill move. We need to

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Speaker 1: see what the replacement of Mr Rajon, who it's going

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Speaker 1: to be, and what the polity is gonna look like.

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Speaker 1: We we strongly believe uh the drop inflation, the drop

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Speaker 1: in interest rates, the very sound monetary policy, the stabilization

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Speaker 1: of rupee has been a critical part of the Indian

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Speaker 1: story in the last three years, and so as well

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Speaker 1: as the more conventional reforms. We need to know that's

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Speaker 1: going to carry on. Until we do, we're just being

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Speaker 1: a little bit more cautious short tone. Jeff Danis, thank

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Speaker 1: you so much, very much for enjoining us. He's had

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Speaker 1: a global emerging market strategy at UBS Securities, very interesting.

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Speaker 1: He and his team were defensive with the departure of

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Speaker 1: Ragu Rajan as the head of the world The Reserve

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Speaker 1: Bank of India has to watch and see how it

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Speaker 1: plays out. Who his replacement maybe. I'm Kathleen Hayes along

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Speaker 1: with him, Fox's taking Stock on Bloomberg Radio. Coming up

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Speaker 1: on taking Stock the Brexit vote on Thursday. Will UK

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Speaker 1: voters will they vote to a main part of the

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Speaker 1: European Union? And what happens to the pounds sterling. That's next.

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Speaker 1: I'm taking stock