In an interview to CNBC-TV18 Peter Elston of Aberdeen Asset Management shared his reading and outlook on global equity markets. He believes that global markets have stabilised and global investors don’t think that the impact of Fed tapering would be quite as serious as they might have thought last year.
According to him, investor sentiment towards emerging market currencies has improved and from equities, he prefers India over China.
Further he added that central banks across the world would focus on containing inflation and in FY15 markets will concentrate more on central banks' decisions.
Below is the verbatim transcript of Peter Elston’s interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy. For the complete interview watch the accompanying video
Latha: What do you think is the overall FII mood towards India at this juncture? We have seen larger days of minor outflows and very few days of minor inflows, net-net do you think the first half of the current year is likely to be an outflows period?
A: Things have calmed down a little bit. We certainly moved on from some of the fairly serious periods last year when we saw not just the outflows from India, but in a number of emerging countries. We are seeing that investors digest reality of the world, which we are now in which is one of certainly the Fed wanting to pull back on its stimulus, but other developed Central Banks I am sure want to do the same.
Investors don’t think that the impact of that is going to be quite as serious as they might have thought last year. The other point is that if you are getting some improvement in economic growth in the developed world then that is going to be good for emerging countries.
Sonia: After a bit of a mini correction that we saw in the US markets, this buy the dip approach seems to be back, would you also ascribe to that view that you should be buying every dip in the global markets?
A: We think the last three-four years it is going to be about what Central Banks are doing. Equity markets hate two things, deflation and high and rising inflation. If Central Banks can stop economies from slipping into a deflationary environment and economic growth is not sufficiently strong such that inflation is going to start rising significantly then we are going to stay in this world of inflation, which is perhaps a little bit on the low side but it is certainly comfortable for equity markets. We are in an environment where valuations can continue to rise.
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