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NEW YORK — The New York Knicks survived a furious fourth-quarter comeback by the San Antonio Spurs to secure a 105-104 victory in Game 2 of the 2026 NBA Finals on Friday night, taking a commanding 2-0 series lead and extending their postseason winning streak to 13 games.

Karl-Anthony Towns led the Knicks with 21 points, while Jalen Brunson and Mikal Bridges each added 20 in a contest marked by momentum swings and clutch moments. Victor Wembanyama paced the Spurs with 29 points but missed a potential game-winning jumper with two seconds remaining, sealing New York’s narrow escape at Frost Bank Center.

The win moved the Knicks within two victories of their first NBA championship since 1973. No team has ever come back from an 0-2 deficit in the Finals after losing both home games. Game 3 shifts to Madison Square Garden on Monday.

Dramatic Fourth Quarter Decides Outcome

The Spurs erased a 14-point Knicks lead in the second half with a 14-0 run that gave them their first lead of the half at 104-102 on a Wembanyama layup with 39 seconds left. However, a critical turnover and defensive lapse proved costly.

After rebounding a missed shot by Brunson with 13 seconds remaining and the score tied at 104, Wembanyama passed to a teammate who was not looking, allowing Brunson to steal the ball. Wembanyama then fouled Brunson as he fell out of bounds. Brunson made the first free throw for a one-point lead but missed the second, giving San Antonio one final chance.

De’Aaron Fox set up Wembanyama for an open 20-foot jumper, but the 7-foot-4 superstar’s shot rimmed out, ending the Spurs’ hopes.

“A great player got a great shot, it just didn’t go in,” Towns said on the ABC broadcast.

Knicks coach Mike Brown praised his team’s resilience. “They made a run, we made a run, they made a run, we made a run,” Brown said. “We could have folded a few times but our guys just kept fighting. … No matter what run they went on, no matter the time of the game, our guys just kept uplifting one another.”

The Knicks shot 15 three-pointers successfully, many from role players who compensated for Brunson’s 7-for-25 performance. San Antonio struggled in the second quarter but mounted a desperate charge in the fourth.

Wembanyama’s Growing Pains in First Finals

Wembanyama finished 11 for 21 from the field but took only four shots in the first half, prompting Spurs coach Mitch Johnson to call the effort “not acceptable.” The young phenom had carried San Antonio through the playoffs in his first postseason, but the Knicks’ depth and physicality posed new challenges.

The Spurs led by as many as 12 points early but went cold from the field, allowing New York to build a halftime advantage. Despite the loss, Wembanyama’s late heroics nearly forced overtime in a game many are calling an instant classic.

Knicks’ Historic Postseason Run

New York’s victory extended an impressive playoff run that includes eight straight road wins. The franchise has not reached this stage since the early 1970s, and the current roster’s blend of star power and depth has made them favorites to close out the series.

Towns and Brunson have formed a formidable inside-out duo, while Bridges and supporting cast members have delivered timely contributions. The Knicks’ ability to withstand San Antonio’s runs demonstrated the mental toughness built throughout the season.

Series Outlook and Game 3 Implications

With the series shifting to Madison Square Garden, the Knicks will look to capitalize on home-court energy to build an insurmountable lead. The Spurs, facing elimination pressure, must find answers for New York’s perimeter shooting and interior dominance.

San Antonio’s youth and inexperience in the Finals showed in critical moments, but their resilience suggests they will not go quietly. Wembanyama’s growth under pressure remains a central storyline as the series progresses.

Broader NBA Finals Context

The 2026 Finals pit two contrasting styles: New York’s gritty, defense-first approach against San Antonio’s modern, positionless offense led by a generational talent in Wembanyama. The Knicks’ experience and home dominance give them a clear edge, but the Spurs have proven capable of upsetting expectations.

Fans in Brooklyn celebrated wildly at local bars as the final buzzer sounded, chanting “Knicks in four!” The atmosphere at Madison Square Garden for Game 3 is expected to be electric as New York inches closer to ending a 53-year championship drought.

The series has delivered compelling basketball early, with Game 2’s late drama living up to the high stakes of the NBA’s showcase event. As the action moves east, both teams will make adjustments, but New York’s momentum and home advantage position them strongly.

The Knicks’ ability to close out games against a surging opponent bodes well for their championship aspirations. For the Spurs, avoiding an 0-3 deficit will require sharper execution and continued belief in their young core.

As the 2026 NBA Finals unfold, the basketball world watches to see if the Knicks can complete their long-awaited journey or if the Spurs can engineer a historic comeback. Friday’s thrilling victory has set a high bar for the remainder of what promises to be a memorable series.

NEW YORK — The New York Times Connections puzzle for Saturday, June 6, 2026, challenged players with clever word groupings centered around everyday concepts, emotions, animals and common phrases, with the solution now available for those seeking to verify their results or catch up on the daily brain teaser.

Puzzle number 1091 featured 16 words that solvers had to categorize into four groups of four, each linked by a unifying theme. The puzzle maintained the game’s signature balance of straightforward and tricky connections, delivering an engaging mental workout for millions of daily players worldwide.

Today’s Connections Groups and Answers

Yellow Category (Easiest): Pillar Words: POLE, POST, SHAFT, STAKE

Green Category: Indicate, as Emotions Words: BETRAY, DISPLAY, EXPRESS, REGISTER

Blue Category: Kinds of Lizards Words: BASILISK, DRAGON, MONITOR, SKINK

Purple Category (Hardest): _____ Table Words: DINNER, DRAFTING, ROUND, TIMES

The yellow group focused on structural supports or upright objects, while the green category captured ways emotions or feelings can be shown or revealed. The blue group required knowledge of reptile terminology, and the purple category tested familiarity with compound phrases involving different types of “tables.”

Many players found the yellow and green groups accessible through logical deduction, while the blue and purple categories demanded more specialized vocabulary or lateral thinking. The mix kept the puzzle fresh and rewarding for both casual and dedicated solvers.

How Players Tackled Saturday’s Puzzle

Solvers typically started by identifying obvious clusters, such as potential synonyms or thematic links. Early recognition of emotion-related verbs often led to the green group, while spotting structural terms helped unlock yellow. The lizard category surprised some with its specificity, and the “_____ Table” theme rewarded those familiar with idiomatic expressions.

Community discussions highlighted the satisfaction of completing the puzzle in fewer mistakes, with many sharing their solve paths and occasional near-misses on social platforms. The New York Times’ Connections Companion provided hints and post-game analysis for those wanting deeper insights.

Connections’ Continued Popularity

Since its launch, Connections has become a staple alongside Wordle in the New York Times’ expanding word game portfolio. The game’s format — categorizing 16 words into four themed groups — encourages pattern recognition, vocabulary expansion and collaborative solving among friends and online communities.

On June 6, 2026, puzzle 1091 continued this tradition, drawing participants who appreciate its daily reset and increasing difficulty gradient. The social sharing feature, which allows players to post emoji grids without spoiling answers, has been key to its viral appeal and community building.

Analysts credit the game’s success to its perfect blend of challenge and accessibility. Unlike purely luck-based games, Connections rewards knowledge, deduction and persistence, making victories feel earned. The New York Times carefully curates words to avoid obscurity while maintaining engagement.

Strategies for Mastering Connections

Experienced players recommend scanning for standout words that might fit multiple categories as starting points. Looking for synonyms, homophones, proper nouns or thematic clusters often accelerates progress. Saving the most difficult category for last, as the game suggests through its color coding, helps maintain momentum.

For Saturday’s puzzle, focusing on versatile words like “POST” or “DRAGON” provided strong entry points. Regular play builds intuition for common connection types, such as compound phrases, categories of animals or emotional expressions.

The game also offers educational value, exposing players to new vocabulary and cultural references. Teachers and language enthusiasts frequently incorporate it into learning routines for its cognitive benefits.

Cultural Phenomenon and Community

Connections has fostered vibrant online discussions on Reddit, X and Discord, where players compare solve times, share strategies and celebrate streaks. The June 6 puzzle sparked conversations about lizard species and idiomatic uses of “table,” showcasing the game’s ability to spark curiosity.

Its influence extends beyond entertainment, appearing in workplace icebreakers, family game nights and even corporate team-building activities. The daily ritual provides a shared cultural moment in an increasingly fragmented media landscape.

Looking Forward in the NYT Games Calendar

As Connections continues its steady run, anticipation builds for future puzzles that test solvers’ ingenuity. The New York Times maintains a careful balance in word selection, ensuring puzzles remain fair while varying in difficulty.

Companion games like Wordle, Spelling Bee and the Mini Crossword offer additional daily challenges within the same ecosystem, creating a comprehensive word game experience for enthusiasts.

Saturday’s solution exemplified the game’s appeal: straightforward enough for broad participation yet clever enough to delight word lovers. Whether solved perfectly or with a few mistakes, each puzzle contributes to players’ growing linguistic agility and daily sense of accomplishment.

For those who missed the June 6 edition, past puzzles remain accessible through the archive. The beauty of Connections lies in its consistent fresh start each day, allowing players to reset and improve regardless of previous performance.

As millions worldwide continue engaging with the game, it reinforces the joy of language, pattern recognition and collective problem-solving. Puzzle 1091, with its pillars, emotions, lizards and tables, joins the ever-growing list of Connections challenges that unite players in a simple yet intellectually stimulating daily ritual.

This refers to ‘We withdrew stimulus last year!’ (ET, Mar 4). TT Ram Mohan has rightly suggested that the tax-GDP ratio measures structural improvement. The FM must rethink his medium-term debtto-GDP target. Losing substantial revenues by cutting I-T rates seems odd. If oil breaches $75-80, the FM will have to hike petroproduct prices and borrow more. Most sectors like FMCG are raising prices sharply due to hikes in excise duties and fuel taxes. Macro-economic conditions like hefty government borrowings, tight monetary control and a fiscal strategy relying on uncertain disinvestment/spectrum auction proceeds, will impinge on private investments in 2010-11. D B Naik
Mumbai, March 4

VanEck is a global asset management firm offering ETFs, mutual funds, private funds, model portfolios, institutional strategies, separately managed accounts, as well as UCITS funds. Since our founding in 1955, putting our clients’ interests first, in all market environments, has been at the heart of the firm’s mission. VanEck has a long history of looking beyond financial markets to spot trends that create meaningful investment opportunities. We were one of the first U.S. asset managers to give investors access to international markets, which set the tone for identifying asset classes and themes such as gold investing in 1968, emerging markets in 1993, and exchange traded funds in 2006 that later helped shape the investment industry. The firm oversees $161.7 billion in assets as of September 30, 2025. Disclosures: http://ow.ly/SZ9450N5qTJ.

Key note address delivered by Christopher Wood, equity strategist, CLSA, in his first public appearance in India, at the ET Now Market Summit-2010. Excerpts:

Hello everybody and thank you for asking me. I will be running through some charts which were still first with the situation in the West. Then I will move on to charts on Asia and India. So I get the bad news out of way first. But this seems to be the wrong way around. So I am getting from back to front here. (Watch)

To start with the US situation, this is a big picture chart everybody needs to be aware of in the global economy. This is US total debt as a percentage of GDP. The story is very simple and the total amount of debt in the system in the US has been going down ever since the credit crisis erupted in 2007-2008. This the first time total debt has been falling in America since the Great Depression.

Mr Bernanke of the Federal Reserve has been trying to get the re-leveraging game going so far, they have not succeeded. My operating assumption is to assume that the leveraging will continue that we peaked out in the US super credit cycle in 2007, which has been running since the Second World War and now in a long-term de-leveraging cycle, which means lower trend GDP growth.

May be re-leveraging will kick in coming months in which case I will change my view, but for now I am assuming it’s a de-leveraging cycle until the data proves otherwise. Next chart you see US total net credit market borrowings and you can see the rate of growth of borrowing has been going down in the system despite the big kick up in Federal Government borrowing.

Next chart is a long-term trend in US nominal GDP 10-year compound annual growth. As the Japanese example has shown in the last 20 years, when you get into a deflationary environment, it no longer makes sense to look at real GDP measures because when inflation zero level what gives a more realistic picture of what is going is nominal GDP. And in my view, nominal GDP growth in America will continue to trend down. We have seen a big rally in US government bond prices this year, as telling you the trend nominal GDP growth is lower and that means the trend earnings growth, trend revenue growth in America is also going to be lower.
Then next chart relates to the consumption story in America which in my view is going to remain anaemic. In my view the US consumers, western consumers in general, are going to be increasing savings rate. There is also a demographic kicking in… the baby boom as heading for retirement, but they cannot afford to retire. So topline is US real disposable personal income, the bottom line is real personal income excluding current transfer receipts. Transfer receipts basically mean welfare payments. So you can see without all the stimulus from the government the fundamental income trend is much weaker. What separates the emerging markets from the developed world is an emerging markets like India with healthy income growth and the developed countries, be it the US, Japan, Europe, we do not have healthy income growth.

Next chart highlights a significant rally in US Treasury Bond prices reflected in declining treasury bond yields which has happened this year. At the start of this year the biggest bearish consensus amongst global equity investors was that US Treasury bonds were screaming sells.

Everybody said that the treasury bond market is going to collapse, the Fed printing money inflation is coming back. Clearly that consensus was completely wrong. US Treasury Bond market has been rallying even with the recent pick in the S&P and recent weeks up to 1150 level which I think was a peak of this counter trend rally. Even with the stock market rally the bond market did not sell off. What this bond market is telling you is that nominal GDP growth is slowing in America, it is telling you it is not a normal recovery. The credit multiplier is not working.

Once the inventory cycles happen & the US capex cycle has ran through, there will be nothing left to sustain the economic momentum. So in a deflationary environment, government bond prices are lead indicator of nominal GDP growth. Right now this is a very important point because the US bond market is sending one message and the US stock market is sending another message and basically investors have a decision to make – do they believe the bond market is giving the correct signal or the stock market? My assumption is that it’s the bond market and my experience is that the bond market is no way smarter than the stock market 90% of the time. Meanwhile, this is US headline CPI inflation for the rest of this year we are going to see inflationary pressures falling throughout the world in the West. That’s going to lead to new deflation concerns.

In Asia and countries like China and India, falling inflationary pressures are going to be bullish and everybody is going to realise it does not make sense to worry about inflation in countries like India. The good news is that you have inflation because that reflects the fundamental growth dynamic. But the key point about the US is if the trend over the past 3 months has extrapolated forward, US CPI inflation will turn negative in October. If that happens, it’s not going to be bullish for equities, it’s going to be bullish for government bonds and it’s going to be a signal for Mr. Bernanke, if we have not done that already, to assume quantitative easing.

Next chart, US average duration of unemployment. So basically there are large groups of the structurally unemployed in America. So in this sense, the US is heading for the European systems situation were you have a large group of structurally unemployed living off the welfare state. The problem in America is that the welfare state is much more controversial than in Europe, hence the political divide in America, hence the growing trend under the so-called Tea Party movement.

Meanwhile the classic monetary measures are highlighting the fact that we are not in a re-leveraging cycle, we are still in a deleveraging cycle. This is the US money multiplier representing the velocity of money in circulation. Velocity of money in circulation is declining. So long as that line is declining, it’s deflationary. We don’t have to worry about inflation picking up, and this chart highlights the growing deflationary threat.

Next chart is US broad money supply growth. Again, money supply growth is going down. That’s why the bond market’s rallying, that’s why inflation is not an issue, that’s why Mr. Bernanke is now looking for an excuse to resume quantitative easing.

Next chart is US bank lending. Again, no real sign of any kind of meaningful pick up in bank lending annualise lending loan growth continue to slow another indication of a deleveraging cycle. This is not just about banks restricting credit, it is also about a change in psychology, economic agents be it the companies or consumers have become more risk averse about borrowing.

Next chart is US total securitisation issuance. In the recent credit boom before the bust a large part of the credit cycle was driven by securitization, therefore we are going to get re-leveraging in America. We need to see a healthy pick up in securitisation as well as banking lending, but the only area that has picked up since the crisis is the dark blue line here.

This is agency mortgage bank securities, that’s Fannie Mae and Freddie Mac. These entities are guaranteed by the Federal Government and therefore they do not really count. Any private sector securitisation has barely recovered. Meanwhile the huge role played by Fannie and Freddie should not be ignored in terms of supporting the housing market.
Basically about 96% of the America mortgage market now is government guaranteed. So that’s the US situation. The big picture is still deflationary. However, in terms of macroeconomic shocks that could cause another steep fall in global equities this year for the rest of 2010, I still believe there is going to be another sharp decline in equities like we saw in April and May. It’s more likely to be triggered by the Eurozone where you have systemic risk relating to government debt.
So this chart relates to the ECBs net buying of Euroland government bonds. The key point here is this ECB was forced reluctantly to stop buying junk government bonds in Europe like Greek government bonds in May when the Greek crisis blew up. The interesting point is the ECB is only doing this reluctantly and as equity markets have rallied and the credit spreads have come in, the ECB has progressively bought less and less junk government paper.
Basically last week they hardly bought anything – they’re probably going to go down to zero just as this counter trend rally peaks.

How early we go down depends on whether there is another bout of risk aversion or markets are just focusing on waning growth. This is Greek and PIG government bond yield spreads. I was recommending for several years the investor should bet on wise widening PIG spread. PIG spread, for people who don’t know this, is the average bond yield of Portugal, Ireland, Greece, Spain over the German bond yields-I closed out that just about when the Greek crisis peaked. And I think a better trade is going forward is what I called a Spanish flu trade, betting on rising Spanish CDS.

For now the jury doubts on whether these European countries can make the fiscal adjustments being demanded by the Germans, but people should understand that the Germans have a completely diametrically opposite view to the Americans – they simply do not believe that fiscally stimulating is the way to get yourself out of the economic problem. So right now the weaker part of Euroland has embarked on a fiscal adjustments which is intrinsically deflationary, given the downturn they are facing.

The stress test is being led by Ireland. Last year the Irish economy contracted in nominal terms by more than 10 percentage points. So far the Irish are taking the pain probably because the only boom they have had in the last 1000 years was when they join Euroland community. So in that sense willing to take quite a lot of pain, but in the big stress test it is going to be Spain.

Spain is a big important country. They had a massive private sector debt binge, they got the biggest housing bust in the west, even bigger than the US. So it is going to be interesting to see whether the Spanish political system can make this fiscal adjustment, given the fact they already have nearly 20% unemployed. I have an open mind on this. We just have to see what happens and may be the Europeans can make this fiscal adjustment, in which case it’s going to be a lot of pain, but the Euro as a currency is going to merge with huge credibility.

On the other hand, it may well be that this level of fiscal austerity is simply incompatible with the political systems of these Mediterranean countries. Right now, it is impossible to tell the European who is watching the football and now at the beach we can have a much better ideas they can take this pain by about January-February next year.

But in the meantime if the markets will test or are bound to test the European’s willingness to take this fiscal adjustment in the next few months. Tactically I would be selling the Euro against the dollar here as we had a significant bounce back in the Euro. So those are my thoughts on basically the West. It’s a deflationary environment. But in the US we are going to continue to stimulate in the Europeans because the Europe’s case is going to follow the German President.

Turning to Asia, Asia is a fundamentally healthy story unlike the West. In my view, the peak of the Asia ex-Japan index you saw prior to the credit crisis will be exceeded sooner or later because the Asian economies are growing healthily and have effectively decoupled from the West even though the markets haven’t. This is MSCI Asia ex-Japan relative to MSCI world index. They’ve been in & outperforming trend since the bottom of the Asian crisis in 1998 and that outperforming trend is resuming when the Chinese stock tightening and then formally start easing again which will happen in the next few months. That will reaccelerate Asian outperformance.

Valuation wise, Asia is trading in line with the US on the 12-month forward PE basis. In my view, sooner or later Asia is going to trade at a sustainable premium over the West because the fundamental growth story is so superior. In terms of my relative return asset allocation, I’m going to take a detour here. I am structurally overweight on India and Indonesia as these are the two best long-term stories in Asia. But tactically I have reduced India a bit and raised China because we are going to get a policy inflection points in China in the next few months which will be bullish for Chinese stocks.

But my big underweight in Asia Pac portfolio is Australia which is why I’m weaving more money into China because it has become cheap. What I am underweight on is those stock, sectors, countries which are perceived as beneficiaries of Chinese growth like the commodities sector, because in my view, Chinese growth is going to be slowing for the rest of this year and that’s a negative headwind for the commodities complex.

From an Indian standpoint that was obviously positive. I think oil is going this week to be as high as it’s going to get on its counter trend move. Clearly if you are more bullish on oil, you will be more bearish on India and this is my long only portfolio on Asia or ex-Japan.

I started this portfolio beginning of fourth quarter 2002, sent about 25 to 30 stocks in it, mostly large cap. I cannot have any cash and it’s long only and is basically playing the domestic story in Asia as always. Mostly has the biggest weight being in India because India since always has been my favourite equity story in Asia. It’s still got a big weighting in India. We can argue about the details of what stocks to own etc, but fundamentally this has India. Secondly, China if I did not have a big capital orientation, then I would have less in China, more in smaller Asian markets like Indonesia and Philippines.

That’s the performance of my long-only portfolio compared with the benchmarks. Since I cannot really have cash, as I said, so I cannot really hedge it, but for those who want to hedge I have been recommending since the middle of over 2007 that investors hedge this long Asian exposure by shorting western financial stocks. I have now narrowed that down in recent months into not shorting western financial stocks, but shorting European financial stocks because European financial stocks are much more geared to the systemic risk from junk European government debt and they are also in a much more leverage than American financial stocks.

This is my global portfolio I have also been running since 2002. This has run on a theoretical US dollar denominated pension fund on a 5-year view and this portfolio I have simplified in recent months have got 15% weighting in US 30 year treasury bonds.
That might seem crazy to people given the fact that the US government debt is getting bigger & bigger, but one of my views is that the most likely end game is a sovereign debt crisis in the US and the collapse of the US dollar paper standard. I don’t think that end game happens this year and in my view before this oust in the game is played out the deflationary pressures in the US will take bond yields much lower. So I think it’s quite possible the 10-year Treasury goes 2%, 30 year treasury goes to 3%. For people who think that’s insane, I should point out that the 10-year GDP went below 1% this week and in 2003 got to 0.45 basis points.
So the message is that in deflationary environment bond thing gets very low indeed because the risk aversion causes people like banks, insurance companies, individuals to buy bonds to lock in income because in deflationary environment there is not much income around. So that’s the deflationary hedge, but 45% of my portfolio is geared to the best story in the world, which is Asia.
So I got 15% in Asia or ex-Japan physical property, 30% in my long-only Asia or ex-Japan portfolio. Then I got a longstanding position in gold and gold mining stocks which I have since inception of this portfolio and this position in gold is basically hedging for US dollar denominated pension funds. The big picture risk is that one day simply the world revolt against the ongoing US stimulus and there is a sovereign debt crisis in the US dollar, US government debt, which means the end of the US paper standard and the end of the post 1945 Western paper currency system. And in that environment gold can go parabolic. My longstanding target for gold that can peak in this bull market is $35000 per ounce.

So this is a gold bullion chart in US dollar terms. The key point about this chart is that it’s quite obvious gold is in a bull market and remains in a bull market and this bull market, when it ends, will end in a parabolic spike which we have not seen yet. The next obvious trigger for the next big move in gold will be the next time Mr. Bernanke adopts quantitative easing and the next time he does it he who is going to have to expand the balance sheet more than the last time (because otherwise people are going to worry if it’s going to work), but cannot do it right now because the news flow is not bad enough.

Gold stocks relative to gold bullion price. In my view gold stocks made that relative low to gold bullion price in 2008 when commodities collapsed. So for equity managers who cannot buy pure bullion I would say look at gold mining stocks because if gold goes $35000 per ounce, it is going to be massive operating leverage for those mine. Gold stocks that actually produce gold haven’t hedge the gold and on jurisdictions where governments don’t cease the gold often.

I am turning to some Asian Pacific charts. I will just run through few charts on China that’s a big story for everywhere as I say Chinese market has underperformed this year. The key point to understand about Chinese stocks is that they are policy-driven. Indian stocks are earnings-driven while Chinese stocks are policy-driven. The Chinese government is tightening, that is why the market has been going down. When the Chinese government starts easing, the Chinese stocks will go up and then may be outperforming Indian stocks for a period.

Real GDP growth in China. China growth peaked in my view first quarter. It’s going to be slowing for the rest of this year probably an annualised growth 12% first quarter, may be down to 1% by the fourth quarter. That is going to create a lot of market noise. It will be negative for commodities. It’s not a big deal, but it will create a lot of noise. Chinese bank landing has slowed dramatically this year from the surge last year. China is a command economy banking system. So that looks dramatic, but that has seen the loan growth slowing to 18% which is still respectable, it’s not cold turkey.

China has been tightening on the property market. So what the stock market in China wants to see is more and more developers willing to cut property prices because it’s more than evident that developers are stopping raising prices and starting to cut prices. The greater the hope that the Chinese government stops tightening that process should play out in the next few months. As you can see here average daily residential sales of Chinese properties have fallen pretty dramatically since April when the government got more aggressive on tightening. You’d have read a lot about Chinese property bubbles, especially in America.

The Chinese property markets have a lot of excess supply, but it’s not a bubble because you have very conservative mortgage financing. What you do have there is a lot of high end developments sitting 80% empty. So Chinese people like to have lot of flat value and don’t like to have flats once used because they think a used flat is devalued just like a used car.

What about the currency? When the renminbi starts to rise against the US dollar incrementally, maximum incremental appreciation will be of 5%. So the Chinese are going to let their currency go up slightly, but you are not going to get any aggressive moves.
I got a chart on Hong Kong just to highlight that we have got a big long-term asset inflation story in Asia. The quintessential asset inflation story in Asia is Hong Kong because of the supply constraints. In my view, Hong Kong property would sooner or later exceed 1997 peaks. You can get a mortagage in Hong Kong today for less than 1%. There you see, apart from Mumbai, this is a one property market in Asia with the massive supply constraint. This is a new supplier residential properties. So Hong Kong I think is a classic asset inflation story to monitor.
Turning to India, I would not go too much linked to India because everybody over here would know more about it than me, but we probably had a big inflation scare at the start of this year. In my view, it’s fundamentally silly to worry too much about inflationary pressures in Asia.
We should be celebrating the fact that there is inflation because if there wasn’t inflationary pressures in Asia, it would mean the world is facing a global depression because there is no growth dynamics in the developed world. So I am glad there is inflationary pressure. Having said that inflation is going to be coming off in India for the rest of this year which means that concern should recede. The central bank will continue to tighten incrementally. I think that’s sensible given the external environment, but I think incremental tightening that the RBI is doing is enough to upset stocks here unduly.

Bank credit growth. This I think is a very important chart. The Indian banking sector is a capitalist banking system unlike the Chinese system. So when the economies slow, the banks slow their lending whereas in China they were ordered to lend more. Now the credit cycle is picking up again, that’s a very healthy development. We are looking at about 20% loan growth in India this year. But I think the most important positive points of all is that the credit cycle is being led by infrastructure loans, not personal loans, as you can see from this chart. This raises the key point which in my view is the critical bearable for the Indian macroeconomic story this year and for the next 5 to 10 years is whether we can get an infrastructure cycle playing out.

The fact that infrastructure loans are leading the credit cycle is anecdotal evidence that is happening. If we get infrastructure happening in India, it’s quite possible that India can grow at 9% plus a year for the next 5 years at least, if not 10 years, which means that India in my view is going to be growing more rapidly than China. In my view a more basic trend growth in China is going to be 8% and that’s a growth rate that Chinese Communist party is going to be comfortable with. So the higher growth rate in India than in China, if the infrastructure story happens, is going to raise the profile of the Indian story globally.

Clearly if I am wrong and infrastructure does not happen in India, the whole Indian story becomes much less interesting. It’s not a disaster, but the country only grows just 5%-6%. So this is fixed investment relative to GDP in India. I am expecting this line to pick up again. Car sales, two-wheelers sales are going up. So the consumer story is still perfectly good story in India. It has picked up with the monetary easing, but as I say the key variable for me is infrastructure.

In terms of risks to the Indian markets, probably the biggest risk to the Indian market is simply the huge amount of foreign money. My own guess is that the next time there is a global hiccup, foreigners will sell India less aggressively than in 2008 for the simple reason that India has shown it can decouple from the US economic cycle.

The other point is the fact that foreign investors stay much in India is basically confirmation that India is a good story and those foreign investors who have not yet invested in India are all desperately waiting for a correction. So they can invest, that’s the mindset of them.

One year forward price to book. India is not cheap, but it’s not expensive in the context of Indian stock market history and in my view the Indian stock market will continue to trade at a premium to Asian and mother of emerging markets because the Indian market is like one big growth stock and growth stocks trade at a premium. Clearly, if you want to enter in an equity portfolio for dividends & you don’t buy India, then you should go and look at Singapore.

This chart perceives a useful chart for anybody who is trying to raise Indian funds in the room because it shows a huge outperformance of India – MSCI India relative to MSCI China in recent history. I will just end with the 3 charts on Japan & the reason I am doing this is because of my experience when I lived in Japan in the early 90s and the experience of Japan in the last 20 years is a potential lead indicator of what is going to happen in the West.