Business Daily from THE HINDU group of publications
Tuesday, Jul 25, 2006
Business Daily from THE HINDU group of publications Tuesday, Jul 25, 2006 |
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Markets
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Interview
Mr Yoshitaka Harada, General Manager (Asset Business Development) at Shinko Securities, says that while Japanese investors have been cautious after May, they are still bullish on India for the long term.According to him, the company has not seen much redemption so far; it has, in fact, raised about 42 billion yen for a new fund. He also said that the company does not consider India overvalued at current levels. Excerpts from CNBC-TV18's exclusive interview with Mr 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. 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 per cent. They 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. 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 Japanese investors may 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? Do you expect to see any pullout of money from other emerging markets, other than Japan? We have about 1,500 billion yen worth of personal financial assets in Japan. Increased interest rates will not affect our investment stance much. We think that Japanese investors' appetite for markets outside Japan is still strong, for the long term. 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 expect to invest more in the Indian markets directly? We are expecting the Japanese investor to put money for the long term, because they believe in the long-term structured growth of the Indian economy.
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