London: Global markets are going to put behind the Greek debt crisis and monetary tightening in China and India to rally over the next few months, Robert Parker, vice-chairman of Credit Suisse Asset Management, said in an interview. He also said the Indian market was satisfied by the Union Budget’s balancing act between fiscal prudence and growth, and the country will be able to bring down inflation over the next six months. Edited excerpts:
Bright outlook: Credit Suisse Asset Management’s Robert Parker. Graham Barclay / Bloomberg
Do you think risk aversion has begun to recede across global markets?
Yes...a number of the negative factors that hit markets, particularly in January and early February, are now fully discounted...
I am thinking particularly of the negative news in Europe (the Greek debt crisis) and also thinking of the monetary tightening that was affecting markets from China and also India and that resulted in a setback in global emerging equity markets... I think, going forward, at least for the next two-three months as we go into late second quarter, we will see global equity markets higher from where we are today.
So are we in for a more meaningful rally across global markets?
If you look at the global equity index, between now and late May, we could see equity markets up between 5% and 10%. I don’t think it is going to be the sort of dramatic rallies that we saw in 2009, but I do think you are going to see steady positive progress in global equities over the next two-three months.
What do you make of market movements in India after the Budget?
I actually think the Indian authorities managed expectations over the Budget very well. It obviously was a challenging Budget because India has to address the progress in reducing the fiscal deficit... Markets were satisfied with the plans on reducing the fiscal deficit.
I think we could see, with monetary tightening, some improvement in inflation over the next six months—it is not going to be immediate. I think there was a positive response to the growth projections and, particularly, with the need to maximize strong investment spending.
What do you make of the divestment target set out in the Budget?
I think it is a positive and I would argue that, number one, that is positive in hopefully energizing the economy and it is part and parcel of achieving those ambitious growth targets as the ministry of finance has said.
Secondly, I think it should be a positive for the development of Indian equity markets. Thirdly, it should be a positive for attracting both domestic savings and foreign capital. So yes, the targets are ambitious and I think the targets will be achieved, I cannot see any negative factors in those plans.