'Japan still bullish on India for long-term'

GM-Asset Business Development at Shinko Securities, Yoshitaka Harada says that while Japanese investors have been cautious after May, but they are still bullish on India for the long-term.

According to him, they have not seen any redemptions so far, and have infact raised about 42 billion Yen for their new fund.

He also says that they don't think India is overvalued at current levels.

Excerpts from CNBC-TV18's exclusive interview with Yoshitaka Harada:

Describe Japanese retail sentiment at this moment.

After May, because of the market turbulence, Japanese investors have been taking a cautious stance. However in the long run, we are still relatively bullish on the Indian stock market and the Indian economy.

When you say that Japanese investors have become a little cautious, does it mean that they have been actually pulling out some money from their India funds such as the one that you run at Shinko or you have actually not seen very large redemption pressures as such from your fund?

At Shinko Securities, we haven't seen any big redemption at all. We have raised additional new money after May, so we started a fund at the end of May, but currently that is at 42 billion Japanese yen, so we haven't seen any redemption at all.

Conversely, in May when the markets corrected, did you see any new money coming in, because the market had corrected and valuations had become cheaper. Did you see any new money coming in from retail or from corporate quarters to invest fresh into the Indian market?

Yes, some investors saw this as a good opportunity to enter the Indian market again, because as compared to the peak in May, it corrected about 20%. So, some investors see this as a good opportunity to enter and to put more money into the Indian stock market.

What is your own assessment of valuations in India? Do you find the Indian market expensive? What according to you is a fair valuation band for the Indian Sensex?

We are taking a long-term investment stance. So at the current PE we don't think the market is overvalued. In the long run, I think it's a fair- valued or a little undervalued situation.

Because of BoJ raising interest rates, there have been some fears that maybe Japanese investors will not put so much money in assets outside Japan and you could see some withdrawals from investments that they had put in other emerging markets. Are those fears legitimate because of rates going up in Japan? Do you expect to see any pull out of money from other emerging mkts, other than Japan?

We have about 1500 Yen worth of personal financial assets in Japan, so with some more percentage of increased interest rates, it doesn't affect our investment stance so much. In the long run, we think Japanese investors' appetite for markets outside Japan is still strong.

Over the next one-year, do you expect to raise more money for your India fund? Or do you expect to see more inflows and therefore you expect to invest more in the Indian markets directly?

We are expecting the Japanese investor to put money in the long-term, because they believe in the long-term structured growth of the Indian economy.

In your current fund of $370 million, you are sitting on a lot of cash at this point in time, any reason why you are holding such a large degree of cash, which is not invested?

We have been a little cautious on increasing our investment position, so initially we have planned to take maybe 1-2 months to consolidate our portfolio and we are following the plan.