You recently mentioned that markets will enjoy a free ride till the end of the year. How is it looking for emerging economies such as China and India, and what is going to keep the momentum going from here onwards?
There is a respite over the last few days since the G20 meeting came out and it was not real clear to people how the currencies were going to revalue. But if you think about it, it was never going to be so clear. The Chinese or the US are not going to say they have decided to devalue the dollar 40% over the next five years. It does not happen like that because if it did, there would be a rush to do it immediately. And there is a concern about the Plaza accord with the Japanese Yen over a short period of time really appreciated quickly.
China still has got a big export economy, the consumer economy, and they want to develop the domestic economy, which has not happened as quickly as they would like. So it is a challenge. There are a lot of challenges in making the big picture happen the way everybody would like it to. Nonetheless, with the Fed that quantitative easing going on, the results of which will not come out until early next year, our feeling is from now till the end of the year we are going to have rising markets. We are fairly confident even with the bump that we had over the past few days and we were actually buying securities for our clients.
In terms of percentage, how much do India and China account for in your portfolio and which country seems more attractive to you at the moment in terms of opportunities and valuations?
We have a challenge investing in India because we are mostly representing wealthy families and in the regulatory environment in India, it still prohibited for those families to invest in the Indian stock exchange. They can go through hedge fund, mutual fund or an ETF, but they cannot buy directly which is our preference. I met with some people on the head of the Securities Exchange Commission in India and I know they are going to rectify that. The regulations were just not as developed.
China is a very interesting market, but we love Indonesia. Indonesia has an internal combustion engine. It is much more realigned on domestic demand and for us, Indonesia really has been one of the most profitable markets in Asia this year and last year, and I think it is going to do quite well going forward over the next 12 months. So, my feeling is Indonesia is an even more interesting market than China.
With India seeming confident of achieving high economic growth in the coming decades based on its demographics, which sectors are you bullish on in the medium to long term?
I do not spend much time focusing on India because there are so many other places to focus on that we can invest in. So, I am not able to give you sort of the best sectors of India because I just do not spend enough time focused on there. But in Indonesia, I would really focus on the consumer segment. The consumer is driving the Indonesian economy. The trickle-down effect has not happened to a great extent but it will happen. So, right now you have a great land grab where the modern retailing is trying to get as many as spots as they can. So they can build the distributions.
Source: http://economictimes.indiatimes.com
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