Saturday, March 5, 2011

Macro Environment in India to Remain Challenging...

On India, Emil Wolter, head of regional strategy at RBS said the macro-economic environment will continue to remain challenging for sometime. Even if broadbased value were to emerge, he does not see it likely to result in immediate upsides. "We are advising clients across the region to remain undeweight on the Indian market for the time being", said the RBS strategist while presenting his report at a media briefing in Mumbai on Mar 4, 2011. Mr.Wolter is of the view that the cyclical indicators for the global economy are bottoming. He believes growth in the first half may surprise on the upside, particularly in the US.
"On the other, bond yields are likely to have hit a low in 2010 and are under threat from a move higher due either to credit concerns or higher inflation/better growth. Yet the debt spiral in Europe is unresolved and we question if the global economy can grow robustly with significantly higher interest rates."
"All the easy money is leading regional inflation higher, supporting earning growth (in aggregate) and forcing savings awayfrom cash towards finacial assets.
With bonds expensive and property having massively outperformed, equities are obvious destination."
M.Wolter warned that bubble is forming in the Asian equities and expects 15-30% returns from this asset class over the next 12-18 months.
The RBS reginal strategist believes the 30 year bull marketin government bonds is possibly over.

What I understand out of Wolter's strategic intent is that India would pursue equity market in absence of any other asset valuation not being trustfully building invertor's confidence.
The bubble that he spoke about looks like a good short-term bet to capitalise upon but the challenge is 12-18 months time frame is still cyclical and you never know which spiral of this cycle you get your returns. Timing still is a big play..

I liked Wolter's view point on push fund leading to easy money and that leading to inflation and that leading to growth and that falling to the unresolved debt trap...who is willing to loose, banks or investors or the debters?
Everybody has their their question and only they have to find their own answers.

No comments:

Post a Comment

Moonlighting and hypocrisy of corporate India..

  MOONLIGHTING CHECKS? WITHOUT FORENSIC TECH AND REGULATIONS? ARE YOU KIDDING US? 5.4 million people work in IT/ITES in India, churning $180...