Europe to improve at steady pace, says Quam Asset

Richard Harris, chief executive at Quam Asset Management expects Europe to improve at a steady pace. Moreover, he indicated that the result expected on Wednesday is a temporary solution.

According to Harris, India looks good in long-term as it is a more diversified economy. Liquid emerging markets are likely to remain volatile in the near-term, he added. Here is the edited transcript of his interview. Also watch the accompanying video. Q: Are you expecting much more gains to follow as something concrete emerges on Wednesday or will that be a temporary move up?
A: I have been bullish for about six weeks now. The stock markets always discount news early on. In this case, they discounted the news quite heavily. The possibilities are bearish concerning Europe, but Europe has been putting the world into place brick by brick. The delay in announcements seems to be taken quite positively by the markets. Q: What solution are you expecting for Wednesday? How concrete solution are you expecting? Will it be a temporary relief or something more solid and permanent?
A: I have no doubt that they will not be able to come up with a permanent solution because it will take quiet a long time. The whole issue of Italy and Spain are very big concerns. In terms of dealing with some of the smaller markets, they might come up with something.
It looks as if France will pursue Germany to yield a bit and vice versa. I suspect a number of people will take haircuts in this round. It will be a temporary fix. However, we are somewhere along the path. Q: Emerging market funds saw some bit of inflow after a bit of hiatus. A city trading report speaks of inflows of USD 665 million into emerging market funds for the latest week. Is there a change in sentiment? Will you see more of this kind of flows into emerging markets?
A: There has definitely been a general de-risking. The US dollar has weakened a bit. There was less pressure on some of the currencies. You have seen gold come back a little bit and oil has also relaxed.
On the other side, we have seen some money go into emerging markets. Liquid emerging markets like Hong Kong often act as world