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See 10-15% correction in mkts: Aberdeen AMC

Published on Tue, Jul 14, 2009 at 10:58 | Source : CNBC-TV18

Updated at Wed, Jul 15, 2009 at 14:45

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Hugh Young, Managing Director, Aberdeen Asset Management Asia

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Nifty

BSE | NSE 10/02/12

Are Mutual Funds betting on Nifty?

Hugh Young, Managing Director of Aberdeen Asset Management Asia, said he expected another 10-15% correction in markets and added that 2010 outlook 'was murky'.

According to Young, India remains expensive for the short term. He, however, said they had a substantial exposure in India for the long term, and that they would look to buy in Indian markets on corrections.

The monsoons were not a concern for long-term investors in India, Young said.

Also read: Mkts upswing may resume from Oct '09: AMP Capital

Here is a verbatim transcript of the exclusive interview with Hugh Young on CNBC-TV18. Also watch the accompanying video.

Q: What's your sense--is the mild 10-12% global correction over or do you think there is more to come?

A: We think, on balance, as probably more to come. The outlook for the next year or so is still quite murky. Yes, we seem to have survived a financial meltdown but as far as earnings are concerned for the bulk of the corporate, we look at across the world not just Asia; the outlook for earnings is still very cloudy for the next 12-18 months.

Prices have jumped sharply from the lows on the back of the liquidity that was pumped into the markets globally. However, we think it will be healthy if markets stabilize or indeed pullback a further 10-15%.

Q: Do you feel it will be 10-15% for emerging markets as well because this has generally been the pocket that has outperformed in these past few months?

A: Yes for emerging markets as well. Emerging markets, importantly, is not facing massive problem that the developed world faces--the government is in good shape financially, the corporate are strong, the financial systems are strong and the consumers in emerging markets typically are not overleveraged which is a very good news. However, that has been to an extent reflected in the bounce we have seen in emerging markets where they have led the way. And frankly for companies we are seeing across emerging and developed markets, the outlook for earnings is similar. It's very tough on the P&L line for the next year or so. Importantly, the emerging markets have the strong balance sheet and that's what will see them through. So question of us favouring balance sheets unquestionably for the longer-term investor emerging markets are where you should be.

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