Inflation a global phenomenon: Schroders Pvt Clients

Leslie Phang, Head of Investments at Schroders Private Clients says there is no proper visibility for Asian markets.

He told CNBC-TV18 that inflation is a global phenomenon and that the slowdown will hit emerging markets more notably Asian, than it will on OECD countries.

Excerpts from CNBC-TV18's exclusive interview with Leslie Phang:

Q: What’s your call on the entire Asian pack this morning?

A: I think its simple just look out of the window, whatever the weather looks like that is probably what the market is doing right now, there is no visibility.

Q: Considering that the Tankan report- they had said that the pace of decline has moderated. Do you see Japan headed for a deep adjustment right now even South Korean GDP forecast have been cut?

A: I think that the point here is that the data that is coming out is not positive, it is less negative than what the market is expecting. From our standpoint we are actually positioned from a stagflation standpoint and by stagflation we mean that we are not seeing that the economy may necessarily go into negative GDP but that it’s in a technical recession.

For the emerging markets countries if the GDP numbers were to be mid-numbers and even for the Organization for Economic Co-operation and Development (OECD) to be a low figure digit, we should just embrace the fact that we are going to be in for significantly more tough times and not be holding too much in equities that will be our standpoint.

Q: What’s your call on India then because it’s pretty much the same set of concerns doing the rounds here as well- high inflation, a larger deficit and of course the stock markets reacting the way they are?

A: Yes when it comes to India it is a little bit worrying because as we saw with regards to the current account deficit, it was not supposed to be a deficit, it was supposed to be a surplus. So things are certainly not looking too rosy for India.  As I have mentioned in some of the prior interviews, the problems here is with regards to inflation; not on the consumer side but on the producer price, in that the things are getting more expensive and this is going to be hurting into earnings.

This is a global phenomena and one of the things that worry us is that the slowdown will hit emerging markets more notably Asian, than it will on OECD countries. So this is something that we are going to be keeping a watch out for.