Published: Wednesday September 10, 2008
India's economy seems to have hit a wall.
Growth is slipping, the stock market is down more than 40 per cent and foreign equity investors, including those from Trinidad and Tobago, are considering fleeing with their money before the economic bubble bursts.
It wasn't like this six months ago.
Annual growth was nine per cent, stocks surged 50 per cent and corporate profits were up 20 per cent and it seemed like the world's largest democracy was in healthy financial shape.
In many respects, India's forward economic march has slowed in recent months to a distinct crawl.
Now foreign and local investors who followed the money and investment growth in India are worried as they see their stock and fund investments slip in a country that is reeling from the effects of global rising inflation (the highest since 1999) and high crude prices.
The Asian country is hurting from 12 per cent inflation and interest rates are rising while the rupee is falling.
Foreign investment is trying to escape to greener pastures and local institutional and individual investors are thinking about following suit.
One of the funds under attack is the Bourse Securities-sponsored SavInvest US dollar investment income fund.
Bourse Securities managing director Subhas Ramkhelawan admits that the fund has tumbled 28 per cent in over recent months.
But in an interview last Friday with Indian-born, Mumbai-based fund manager Vijay Sarda at Bourse's Port of Spain offices, Ramkhelawan pointed out that SavInvest still outperformed other closed-end funds which had dipped between 38 per cent to 42 per cent in recent months.
Sarda was flown to Trinidad last week for a two-day stay to allay the fears of local investors who are worried about how much money they're losing in India these days.
He told the Business Express that although big name investors made millions in India phenomenal returns did not mean India was immune to global inflation.
"After a bull run for years, after a strong rally, the markets have fallen," he admits.
But India is not about to fold, he insists.
Infrastructure development is moving apace with new ports, airports and information technology centres being built.
Private players are coming back or sticking around through the turbulent times and consumption is surging as younger Indians are making more money and spending more.
"Young Indians (between 25-50 years old) are spending more on cars and gadgets," Sarda says. "On average, 28 years old is the age that Indians are buying houses (through mortgage agreements) instead of saving till they're 40."
India's government and Reserve Bank have also agreed to sacrifice some spending and address inflation in the hope it can be brought down to a more acceptable seven per cent by March next year.
These are all good signs, Sarda and Ramkhelawan insist, and an even better indicator that the SavInvest fund is about to get past the worst.
"Once you get stability back, we still feel strongly that India is going to give us excellent results," Ramkhelawan says. "We want to ensure investors are up to date on the fund and we are not the kind of managers who won't see investors when things are bad."
Even in the face of the fall the Asian markets have sustained, no one has pulled out of SavInvest and Sarda and Ramkhelawan agree that while they are taking defensive action now to protect their investors, they have confidence that the market will rally soon.
Ramkhelawan's advice to investors is to hang tight.
"It's short-term pain for medium-term gain," he says.
Source: Trinidad Express Newspapers
http://www.trinidadexpress.com/index.pl/article_business_mag?id=161373835
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment