The Hindu Business Line : `India is one of the better growth stories in Asia'

CLSA has kicked off its 13th Investor Forum in Hong Kong. The five-day event has attracted over 1,200 global investors and some notable speakers are slated to speak at this event. Speaking about the event, Mr Rob Morrison, CEO of CLSA, says that investors at the forum are still positive on India. He adds that India has been outperforming its other Asian peers.

Excerpts from CNBC-TV18's exclusive interview with Mr Morrisson:

What is the mood towards India now and how are most investors approaching emerging markets like ours?

The mood is generally positive. India is one of the better performers in Asia here to date. I think the Sensex is up something like 30 per cent from its June lows.

We have 1,100 investors from global institutions around the world, and I think there are 20 Indian companies here, and the view is generally positive. The growth story looks very positive and from that point of view probably India is one of the better growth stories in Asia.

What is CLSA's call on India as a market? Do you expect it to continue this bout of out-performance and do you see new investors or existing investors willing to commit fresh cash to a market like ours?

India is one of our big picks. I think the top-line earnings growth from Indian companies is very good. Some of the valuations have probably again pushed out to be a little bit pricey.

India and China are two of our favourite long-term plays, and we are starting to see that from an investors' point of view. I think people do see that India and China are very important engines for future global growth.

Aside from the long-term outlook, in the medium term, would you say that for an emerging market like ours, we have probably seen our best times?

Medium term, I think the valuations have probably pushed through levels, where people are going to be pausing. But there is still a lot of positives there. Some of the agricultural output numbers have come through, and there is still a lot of demand side push. From a more defensive point of view, the Indian economy is more dependent on domestic factors rather than on the US.

You say that if interest rates in the US go up, it's not so much of a concern for India; but how does that effect flows into India and other emerging markets?

That's a good point. There has been tightening happening all over. Obviously if we move into a sort of higher interest rate environment, you are going to have an impact on liquidity flows. So you have to assume that we will see some slowdown in terms of turnover.

But on the flip side, a number of global investors are looking to increase their asset allocation into emerging markets. This is not just in Asia, but also in Latin America. Emerging Europe also has been a big beneficiary, particularly on the back of commodity plays.

Some people have been saying that in the last three years India has emerged as an asset class on its own. Would you agree that its an asset class on its own or is it just part of an emerging market?

It is, probably some of it is. There are a number of investors who will look to invest in Pan Asia where Japan and India will be part of that mix. The upside for India is that there are a number of specialist funds in India, and that number continues to grow.

We have had a lot of money coming in from the Far East and, of course, from the US as well, but are new markets getting interested in us now?

I think quite a bit of money — particularly retail money — has been coming out of Japan. In a global sense, the US remains a key investor base. We tend to see more of a US client base than a European client base.

So we are seeing more money come out of the Far East, and India is going to be a beneficiary of that.

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