AMP Cap neutral on India, says valuation not too attractive

A: It was a relief that it is finally out of the way. Fed has been talking about this since May this year, so to actually get a decision is a good move and the fact that they did it in a relatively benign way. It is only a gradual taper. It is only occurring because the economy is stronger and they made it clear that interest rates will stay lower for a long period. All of those things are pretty positive for the investment market. For some of our funds, yes we have had exposure in terms of equities, for others we are already overweight, so we do not need to move.

Q: Which are the markets that you are overweight on currently and where does India feature in that list?

A: We are overweight on equities in general, but we are particular focussed at the moment on North Asia, China, Korea, Europe and Japan. We got a neutral position on India at the moment. Indian shares will no doubt participate in the rally and probably see a good day today on Indian share market, probably make a new record high. The valuations on Indian shares are not attractive, for example compared to the Chinese share market. The PE on the Indian share is about 14 times forward earnings, whereas in China it is about 9 times. So I think there is better value elsewhere, but I do think the Indian share market does have more upside ahead of it.