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Indian markets unlikely to be rocked by market turmoil, says Hudson Fairfax


Date: Wednesday, August 22, 2007
Author: Hedgeweek.com

India's economy remains a good bet for international investors, with buoyant domestic demand and strong fundamentals, in spite of the fallout from the turmoil in US, European and Asian markets, according to executives from the Hudson Fairfax Group, a New York-based investment firm focused on India.

A downturn in theIndian markets notwithstanding, global market turmoil sparked by the sub-prime lendingmeltdown and a US credit crunch is unlikely to affect the Indianeconomy greatly, and the case for investing in the country remains strong, the executives say.

'There is no direct connection between economic issues in the USand the prospects of Indian investments,' says Hudson Fairfax chairman and managing partner Armeane Choksi. 'Indian fundamentals are strong.Economic and market conditions in the US should not affect theIndian economy.

'While it's true that a global economic slowdown would affect allmarkets, the Indian economy is buffered because its growth is drivenby strong domestic consumption, and is therefore less vulnerable toglobal conditions than, for example, China and other export-ledemerging markets economies.'

Even the impact on India's financial markets is likely to be near-term in nature. 'In the short term, global investors will pull moneyout of India, for example, as international hedge funds retrench,' says Hudson Fairfax chief executive and managingpartner Manish Thakur.

'But over the longer term, India's fundamental growth story offersbetter returns for international capital, and will draw investorsback. In fact, strong fundamental growth stories in countries such asIndia may be seen as safer long-term investments thanleveraged positions in marginal sectors of the US economy, suchas sub-prime lending.

'It's possible that a global credit crunch would have a near-termimpact on Indian companies seeking debt financing for overseasacquisitions, but most such acquisitions are equity-financed, so we anticipate the impact of restricted credit would beslight. We continue to be bullish on India.'

Hudson Fairfax Groupsponsors and promotes India-related investments, including the HFGIndia Continuum Fund, an investment fund that focuses on publicly traded equities of Indian companies and other securities linked tothese securities.

The company boasts professionals withportfolio management and equity research experience in Indiaspecifically, and in portfolio management, investment banking,economic and legal services in emerging markets in general, and has an extensive network of advisors and professionalcontacts across India's corporate and financial worlds.