1. India: Prime minister Narendra Modi’s Bharatiya Janata Party (BJP) won the largest number of seats in the Indian election, albeit with a smaller number compared to the 2019 vote. Investors are looking to July’s budget for signals on the new government’s priorities. Recent data indicate an improving fiscal position, with scope for a reduction in the fiscal year 2025 budget deficit from the February interim budget forecast of 5.1%. Higher dividend receipts from the central bank and a lower fiscal year 2024 budget give Modi some optionality in deciding expenditure priorities.

2. China’s initial public offering (IPO) pipeline opens: Following a prolonged pause in Chinese IPOs on international exchanges outside Hong Kong, companies are once again preparing to list. This follows the successful listing of a Chinese luxury electrical vehicle manufacturer in the United States during the first quarter. It is likely that one of the world’s largest fast-fashion apparel companies will list its shares, potentially on the London Stock Exchange, in the coming months.

3. Higher for longer: A number of US Federal Reserve (Fed) regional presidents have spoken in favor of keeping interest rates on hold at elevated levels for an extended period of time. Higher-for-longer US interest rates imply US dollar strength is also likely to be continue. This has negative implications for emerging market assets. Historically, a stronger US dollar has coincided with outflows of portfolio capital from the asset class. 

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