Just wondering what advise would the American investors be getting from their advisers?
Well they must be saying:
– US has been downgraded, but our government is still able to borrow at rates at their lowest rates in the past 60 years.
– US is growing at a rate better than all the others in the developed world.
-Is it possible to invest ONLY in the countries with growth? Yes sure remember Brazil, India and China are grappling with inflation.
-Remember the 2G scam? If oil scam and a banking scam come, the Sensex would vanish. Brazil has its drug mafia and China’s banking numbers are far worse. If you take the debt of all their internal Municipalities and state enterprises, the picture is not as good as IMF wants us to believe.
-Interest rates in India is so high that it may be worthwhile investing in debt in India, assuming that the currency risk is over. However the US $ is gaining against the Rupee – clearly showing a deliberate policy measure or the deficit reaching 5% of GDP we do not know. Be neutral on China, Brazil, India and overweight Australia.
Invest in US companies especially ones which have a good presence in C, I and Brazil.
Remember Indian investors will be shifting from equities to debt – debt is very attractive if you do not consider exchange rates and inflation. Retail investors consider ONLY nominal rates, so they will happily be investing in debt at 11%!
Keep cash – when the Indian markets crash invest in ETFs – preferably broad based ones.
all for now,
watch this space.
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