Strategically placed full-stop

Posted below is the transcript of my telephonic conversation with ET NOW today. Readers, if interested, can locate the strategically placed full stop. A very smart mistake, even if wholly unintended. Here is the link to the video. You can hear and note that no full-stop was intended!


India not an attractively valued market; it’s a growth play: V Anantha Nageswaran

By ET Now | 3 Dec, 2015, 11.01AM IST

China and US pose biggest risks to financial marketsVietnam look good from valuations’ perspective.

ET Now: After Janet Yellen’s commentary overnight, the December rate hike looks eminent. It seems like it is a done deal. What is your view?

V Anantha Nageswaran: True. The US Fed looks determined to hike the interest rate in the forthcoming meet. But I do not think the Federal Reserve is going to be very aggressive going forward even after the first rate hike in December.

ET Now: Sorry did I hear you say that you do not believe that the pace of the increases will be swift.

V Anantha Nageswaran: Yes, I do not think so. In fact, we should not forget that the ISM index, manufacturing index in the US, has dropped below 50. We also should not forget that the economy is in its so-called seventh year of expansion next year. The stock market is massively decoupled from corporate earnings, downgrade to upgrade ratio have been rising in the high yield bond sector.
So it is quite possible that the Federal Reserve has left it in a too little too late situation. If anything happens, it may shift back to supporting the economy once again in the course of 2016.

ET Now: What is the outlook for 2016 then? What could be a safe haven, considering you are saying that the future trajectory of US interest rates is not pretty evident? Could China be looked at as a good investment option?

V Anantha Nageswaran: No, not at all. In fact, a contrary to what the public would now think about, there are few markets that are interesting from the investment point of view and they are Brazil, Russia and Vietnam.
It is very important to remember that investor should be buying when there is not a whiff of good news to be had about an economy and that is Brazil right now, closely followed by Russia.

Nobody knows about Vietnam because it is relatively small market. But if the sanctions on Iran are lifted and capital is allowed to flow in and out of Iran, that is a market that might look interesting because it will be by definition uncorrelated from the global trend.
It will be in a catch-up mode, quite independent of the global cycle. The US and China will be the biggest risk for the global economy and financial market in 2016.

ET Now: Maybe you briefly touched upon it, but could there be a lasting impact of decision taken by the ECB on Thursday?

V Anantha Nageswaran: Well I think the ECB will probably be supporting the market. But probably it will make the bubbles even bigger. So the lasting impact will be negative and quite damaging to financial markets and investors in the course of 2016 and beyond.

ET Now: I just wonder if you have a particular view on India because I heard you mention your three preferred markets which included Russia and Vietnam, but there was no mention of India. Why is that?

V Anantha Nageswaran: No, I do not think. I was negative on India. Certainly I was looking at valuations’ perspective. I think India is not a valuation play, it’s a growth play. It is definitely a relative safe haven and much of it is already in the price. So I was coming purely from the angle of attractively valued markets and India is certainly not one of them. So in that sense I did not mention India in my very preferred list but certainly I am neutral to positive on India at these levels especially after 2015 performance that is mostly lacklustre and earnings perhaps are close to bottoming out but certainly it is not in the same camp as the other three countries I mentioned in terms of valuation that is the reason.


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