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India has unique investment opportunities

The Economic Times: February 05, 2010   

Even as money managers across the world are showing signs of aversion to risk, emerging markets, including India, remain the best destinations for investments, feels Jan Straatman, chief investment officer (CIO), ING Investment Management. Mr Straatman has over 25 years of experience in the international asset management industry in various positions. In an interview with ET, Mr Straatman, who manages assets worth about $500 billion across 31 countries, adds that global investors have changed their bearish opinion on India and now view the country as a region having its own unique set of opportunities. Excerpts:

Q: Has there been any change in fund managers’ outlook on emerging markets, especially India, after the 2008 economic crisis?

A: Indian economy is not a weak play anymore, as it used to be compared with the economies of developed markets. Investors have changed their opinion on emerging markets, particularly India, and now see it as a region having its own unique set of opportunities. The perception about India as an investment destination has been improving gradually. It has become a very broader market to invest now compared with very few investment options earlier. It’s becoming more of a consumer-led economy.

Q: What would be your preferred region for investments this year?

A: Emerging markets, including India, would be preferred compared with others. Due to high earnings growth, emerging markets offer a better value proposition. We believe that derating in Japan will continue.

Q: Do you think plans to curb proprietary trading by banks have sparked off the recent round of selling in equity markets globally?

A: Equity markets have given spectacular returns in the past one year. Many investors would like to book some profits now. So, the recent sell-off is more due to profit-booking and not due to political statements. There may be a 5-10 per cent correction in the markets, but we expect a good growth going ahead with ample of investment opportunities. At the broader level, markets may consolidate at these levels over the next one year.

Q: What are the major concerns that could undermine the global recovery?

A: There are concerns in the medium term, stemming from widening of fiscal deficit, expectation of increase in interest rates, among others. Also globally, there are still leverage issues in the US, and to a lesser extent, in the UK. There is not much concern as far as inflation is concerned, as we think that it will take time for the economy to recover and therefore the demand will take time to pick up from these levels.

Q: What is your outlook on the equity market in 2010?

A: Equities will be a preferred option, going forward in this year, largely due to factors like loose monetary and fiscal policy and improving macro outlook. The valuations, too, look reasonable in the long term and are attractively-valued relative to other risky assets.

Disclaimer: This information has been collected through secondary research.


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