Bullish India story attracting investors: JP Morgan
Published on Fri, Nov 24, 2006 at 13:07 | Source : Moneycontrol.com
Updated at Mon, Nov 27, 2006 at 12:12
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Bullish India story attracting investors: JP Morgan
David Fernandez, MD and Head of Emerging Asia Research at JP Morgan shares his views on where the US economy is headed and what he feels is the next stance the Fed is likely to take.
Q: With a stronger Euro, is there going to be any concern for Europe for export especially or have they learned to deal with it?
A: They have learned to deal with things. In the past, the ECB (European Central Bank) has always been skittish when the Euro depreciates.
But I think the ECB has come to the view that the corporates have restructured in the Euro area to the point where they can take a stronger currency. So I completely believe that the ECB is going to accept the stronger Euro. It's going to be hiking rates, not just next month, but potentially two more times as we get into next year. This is an ECB that is as confindent as the businesses are in Germany.
Q: Just a couple of days ago we had India and US coming close to signing a deal under which the US would let India have nuclear fuel. There are a lot of spillover effects from that, not just for nuclear contractors and defence industry contractors, but it opens up India to US business and investment. Do you see it that way?
A: The bullish India story is bringing plenty of investors into India. That is a problem for them in terms of the pace of reform and deregulation that will allow more foreign competition with these sectors.
I think we still should keep a lid on expectations about how quickly that can go. That is an area in India where politics get very nasty and can make it very difficult for even an extremely well qualified and technocratic government to get all of the people in the order that it needs to get that type of deregulation in the opening up of markets. I don't think you are going to see any breakthrough moves in the near term.
