Mumbai: The pursuit of safety amid an uncertain global outlook is driving OppenheimerFunds Inc to India.

Political stability, credible monetary policy and the fastest growth among the world’s major economies make India the ‘safest portfolio investment destination’ among developing nations, according to Krishna Memani, New York-based chief investment officer at the money manager, which oversees about $217 billion of assets. His comments come as Prime Minister Narendra Modi’s government inches closer to implementing the nation’s most ambitious economic reform since the 1990s.

“India has always had the potential; what is different this time is that political stability increases the likelihood of that potential getting realized," Memani wrote in an e-mailed response to questions. “Decent growth, political stability, free capital markets and acceptable policy initiatives make India very attractive to foreign investors, especially in light of the significant policy and political risks in other EM destinations like Brazil, China and Turkey."

Appetite for assets in emerging markets is rising as Britain’s June vote to leave the European Union boosted bets central banks will keep flooding the global financial system with cash to ward off an economic slowdown. July’s inflows into Indian stocks are the biggest since March while foreign holdings of the nation’s debt are set to rise the most in nine months.

Stocks, bonds and the rupee rallied on Thursday as Modi’s cabinet met a key opposition demand on proposed legislation that would clear the way for a national sales tax, and after the US Federal Open Market Committee signalled policymakers were in no rush to raise interest rates. The goods-and-services tax, or GST, would replace more than a dozen levies, creating a single market among India’s 1.3 billion people.

Asia’s third-largest economy grew 7.9% in the January-March quarter from a year earlier. The International Monetary Fund predicts an expansion of 7.4% in 2016, it said in July, while scrapping its forecast for a pickup in global growth, which it sees at 3.1%.

“With the right set of policies, given its demographic picture and potential high productivity growth, India has the potential of maintaining that high growth rate for a long period of time," Memani said. Oppenheimer is one of the “largest international long-term investors in Indian companies through its Global and Developing Market funds," he said, while declining to give any specific names.

Modi, who took office in May 2014, has pursued policies to strengthen the $2 trillion economy by boosting infrastructure spending, committing to better public finances and easing curbs on foreign investment. He also joined hands with Reserve Bank of India Governor Raghuram Rajan to rein in inflation.

‘Policy mix’

Rajan, whose three-year term ends early September, has burnished the appeal of local markets by propelling foreign-exchange reserves to all-time highs — a move that helped slash rupee swings — and taking measures to improve financial-system liquidity.

Speculation that his yet-to-be-named successor will be more aggressive in cutting interest rates has helped drive this month’s rally in sovereign bonds, the biggest since May 2013. The 10-year yield slumped to a three-year low of 7.19% on Thursday, but is still the highest among major Asian markets.

India’s rupee has climbed 0.7% in July, heading for its first monthly gain since March, as foreign funds poured a net $1.3 billion into local shares. Their holdings of rupee-denominated government and corporate debt have climbed 75.5 billion ($1.1 billion) this month. The S&P BSE Sensex, the benchmark equity gauge, is headed for a fifth month of gains.

“If the RBI, post Rajan, adopts a more populist policy and throws away the credibility generated by the current policy regime, the bloom could be off the rose rather quickly," said Memani. “The outlook for bonds and stocks could deteriorate" if Rajan’s “policy mix" isn’t maintained, he said. Bloomberg