In an interview with CNBC-TV18’s Ekta Batra and Anuj Singhal, Hans Goetti, Head of Investment Asia at Banque Internationale À Luxembourg joins shared his perspective on global markets.
Below is the verbatim transcript of the interview:
Q: We haven’t had any kind of serious correction in Indian market. Do you get a sense that with the volatility in global markets, the way commodity prices are continuing to fall; this could be that one big correction that the market has lagged?
A: It is a bit puzzling the fact that commodity prices are coming down should be a reason for market to selloff. If you are looking at the price of oil for instance, which accounts for the bulk of the commodity price decline, you have tremendous benefits for the American consumer, you have tremendous benefits for countries like Japan and not to forget to India, so a lot of advantages can be seen in a declining oil price unless you are an oil producer.
The other reasons probably why there is a risk of mentality just right now would remind you that for instance, Greece will have an election on December 17, so Greece all of a sudden gets into headlines again. There are fears that the Fed may increase rates a bit earlier but all this somehow does not add up to saying that this is a new bear market or anything like that.
Q: I want to get a sense in terms of how the oil price rout and the decline that we have seen in NYMEX as well as Brent could impact the Fed’s decision on hiking rates. Would there be any sort of ramification of that?
A: It’s an interesting question because when price of oil comes down, inflation rate comes down with it but at the same time you have a tremendous boost to some economies. So down the road 6-12 months later you will have a booming economy and that would in a normal environment if the central bankers were thinking rationally would lead to tightening of policy but that’s not what is going to happen. I think they are going to look at headline inflation; they see it going lower and then it probably stay easier longer than it is warranted. Its certainly the case of European Central Bank (ECB) and other central banks maybe lesser for the Fed but other central banks will probably ease rather than tighten.
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