Aberdeen: Intialla lukuisia vahvuuksia

VIDEO: Aberdeenin kehittyvien maiden sijoitustoimintaa vetävä Devan Kaloo muistuttaa, että Intian pörsseissä kotimaan taloudella on vahva rooli. Se suojaa globaalin talouden aalloilta.

Emma Wall 14.10.2016
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Emma Wall: Hello and welcome to Morningstar. I am Emma Wall and I am joined today by Head of Global Emerging Markets for Aberdeen, Devan Kaloo.

Hello, Devan.

Devan Kaloo: Hello.

Wall: So we are here today to talk, in particular, about India. Very popular among emerging market investors at the moment. Do you think the fact that it has become bit of a consensus, means it actually – the gains have been made or is it still quite a compelling place for gains, returns?

Kaloo: I think India represents one of the best long-term stories for emerging markets for number of reasons. From our perspective one of the key reasons would be because some of the best run companies in emerging markets are to be found in India. But I think what people sometimes overlook is that India is going to what should be an extended cyclical recovery.

So having been the first to move into a slowdown back in 2009-2010 it's a first to recover and we think has probably the soundest underpinnings. Now, underpinning it is falling interest rates, falling inflation, pick up in government expenditure and indeed potentially a pickup in consumption as indeed private sector infrastructure.

So I think there is a lot to be said for the Indian growth story. And if we are looking next 2 to 3 maybe even 5 years I think the growth story is there for some time to come.

The concern that people have with India, of course, is that expectations ran ahead of what they could deliver as is often the way any markets, valuations have not been cheap and indeed some people would argue expensive. But I think those concerns have dissipated. You know India this has been a laggard relative to many other emerging markets. And as we see good prospects now, good valuations certainly given this compelling longer term outlook for India. So, we are bulls on India. We are positive.

Wall: Looking then longer term out of perhaps a 10-year view. Would you say India is the most compelling of the emerging markets? I know it's very heterogeneous group of countries, but if you have to pick one for 10-year returns, which one would it be?

Kaloo: I think India would certainly be one of them. When we look at the world going forward there is lots of risks. There is a risk to global growth, there is a risk to political scenarios, there is a risk to global monetary policy. And India is probably the least impacted or one of the least impacted countries.

It is a very much a more domestic story. And as a result, probably one of the safer stories within emerging markets and indeed actually I suspect globally as well. So, yes, I would say if you're looking to make an investment over 10 years you couldn't go far wrong with India.

Wall: And looking then at those risks that you mentioned. What are ones that are causing you the most concern as emerging market investor at the moment?

Kaloo: I think when we look at emerging markets over the last few years there has been three big problems; the first has been people's concerns about China and whether that was about to implode or explode depending on your viewpoint; the second is the rise of the dollar and U.S. monetary policy; and third is earnings.

And I think the one that probably concerns us the most or keeps us up at night, if you will, is with regard to U.S. monetary policy and that's more broadly global monetary policy because we've gone through a period since 2008 of extraordinary quantitative easing programme. And there is a concern and a growing concern that that's coming to an end.

Wall: And looking then at global emerging markets as a whole, the sector has been very challenged in recent years. If you look prior to the global financial crisis, you were seeing returns of sort of 10% a year. Which is the reality? Is it the returns that we've seen in the last few years, which are more challenged, more volatile, or will we see a return to those 10% a year?

Kaloo: Well, I started investing in emerging markets in 1994, and I think I'm now on to my 10th crisis in emerging markets. So I'd steer clear of making any bold predictions of what your returns are. But the one thing I'd say or couple of things I'd say is, first and foremost, in a low growth, low interest rate, low inflation world returns should be lower. So expecting the sort of returns that we've seen post-2005 to say 2010, are very unlikely.

That said, I do believe that you'd get better returns out of emerging markets relative to just about everything else going forward, particularly as many of these headwinds I talked about earlier in terms of China, the U.S. dollar, then earnings are turning into, if you like, more tailwinds. So returns going forward will be commensurate with, I think, the underlying growth. While in absolute terms they will be lower, they will be better than most other places. So we are positive.

Wall: Devan, thank you very much.

Kaloo: Thank you.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

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