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India holds promise: Principal Global
22 November 2004, www.moneycontrol.com
FII Principal Global Investor feels that India holds good promise in terms of a broad economic view, and says that its larger companies have good management and a skilled workforce.
Hazel McNeilage, MD-Asia, Principal Global Investor, (Singapore), feels that India holds good promise in terms of a broad economic view, as the larger companies in India have good management and a skilled work force.
Speaking on the advantages that India enjoys as a country, McNeilage said, "Talking of a broad economic view, larger Indian companies have good management. There is a large English-speaking skilled work force and generally, companies are competitive. However, there are challenges like the government's deficit and looking for concrete steps to address at the central and state levels. Also, labour laws should be less restrictive and there should be improvements in infrastructure."
Commenting on the Chinese market, McNeilage said, "There are a number of scenarios that can happen. First, the Chinese government can do nothing and we are inclined that they may do that in the short term and may use other administrative measures to slow the Chinese economy. That is one scenario that is plausible in the short term."
She further added, "The other is that there is a re-valuation of the yuan against the US dollar. We are inclined to believe that if this has to have a lot of impact it has to be fairly significant and we don't see the Chinese government having that sort of an appetite in the short term. The third scenario is that if China moves to a situation of pegging their currency against a basket of currencies, so moving from the US dollar to a broader basket of currencies and allow some kind of range around that. All these things have been disussed by the Chinese regulators and right now there is till some confusion."
McNeilage expects the weakening of the US dollar to be positive for the Asian markets. She said, "We expect the dollar weakness to continue and we expect that to be positive for the Asian markets."
Giving a sectoral outlook, McNeilage said, "Broadly, we remain positive about software. We are looking at this point to re-rate our portfolio to reduce the emphasis on the export-driven companies to more domestic driven companies. We are looking at the Chinese currency closely, and we are getting conflicting reports at this point with regard to the Chinese economy."
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