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May 24, 2001
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Money > Business Headlines > Report May 24, 2001 |
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FIIs eye India as hedge against US meltdownSangita Shah Foreign institutional investors are eyeing India as hedge against the US slowdown and are likely to step up funds to offset their loss in the US markets. "A lot of funds invested in India find it a defensive market and perceive it as a hedge to the US slowdown," Nilesh Shah, chief investment officer, Templeton Mutual Fund, said. The first reason being that there are only two countries in the world witnessing growth rate beyond 6 per cent and India is next only to China. The second reason being that the non-convertibility of rupee unlike other Asian countries where full convertibility led to a flight of capital, thus affecting their economies. "India is much safer destination as an economy because the currency in not fully convertible. This not only reduces the risk of flight of capital from the country, it also cushions the country from the jitters of market crashes and currency crashes abroad," Jignesh Shah, strategist, ASK-R J Investment Management, said. In a controlled environment the fears of recession are allayed, which makes the Indian economy a safer destination, another fund manager said. Most FIIs were of the view that despite variations in the gross investments, India is likely to witness positive investments. Foreign portfolio inflows are expected despite the cut in India weightage by Morgan Stanley Capital International emerging market free index, analysts stated. "There will be no immediate impact on FII investment in the country and no immediate selloff will take place," a foreign fund manager said. Most FIIs have their own views irrespective of what MSCI say and since a lot of funds invested in the country find it a defensive market and also perceives it as a hedge to US slowdown, it is unlikely that they will withdraw funds. Powered by YOU MAY ALSO WANT TO READ:
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