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MR BOB DOLL, GLOBAL CIO, BLACKROCK

Suresh Parthasarathy

Risky assets will outperform, the US markets may be the first to recover and investors will rebalance in favour of stocks. Those are the key forecasts that Mr Bob Doll, Global Chief Investment Officer for Equities at BlackRock Inc , makes on the markets for 2009. Before joining Black Rock in 2006, Mr Doll was the President and Chief Investment Officer in Merrill Lynch Investment Managers (MLIM).

Excerpts from the interview:

With most global stock indices down by 30-50 per cent in 2008, will 2009 be better for stock markets?

Our view is that 2009 will be a year where risky assets outperform safe assets. While not in a straight line, we expect risk premia, in general, to shrink. This is good news for equities. We think that fundamental, valuation, sentiment, and technical factors point to the equity market being in a bottoming-out process currently, with hopefully better news to come later in 2009.

Is a global recovery in stocks a pre-condition for a recoveryin emerging markets such as India?

Emerging markets are unlikely to recover earlier than the developed markets. The process is likely to be gradual.

The problem started in the US. The US has outperformed other developed and emerging markets by and large so far, and that out-performance is likely to continue. So, watch the US equity market for clues on when emerging markets can start doing better.

What’s your outlook on global growth for 2009? Which countries/regions will offer pockets of out-performance for equity investors?

Our view is that global growth will be very poor in 2009 as the world experiences a recession, led by credit problems in the developed world, the US in particular.

Having said that, aggressive monetary and fiscal policy initiatives globally, again centred in the US, should provide for some visibility to recovery before 2009 is over. We think that that recovery will be most evident in the US and emerging markets, and less so in Europe.

What do you forecast for liquidity flows into stocks in 2009? Flights of capital into dollar assets and money market funds and hedge fund redemptions have been the key highlights of 2008.

Our view is that there will be some rebalancing into equities during 2009. More importantly, we believe that hoards of cash on the sidelines will come down somewhat and equities should be the recipient of some of those assets.

How does DSPBR plan to expand its India assets in 2009? If through equity products, what sort of equity products will you focus on?

With a strong suite of products and a robust performance track record, Our endeavour will be to grow our assets under management through incremental inflows into fixed income and equity funds.

New fund offers (NFOs) will be considered selectively, depending on the investment theme and its relevance in the prevalent market backdrop.

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