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Our Market Bureau
Mumbai, Oct 28: Morgan Stanley Dean Witter's managing director and global emerging markets strategist, Robert J Pelosky has said that he accords a 13.1 per cent weightage to India in the fund's model portfolio on emerging markets.
Pelosky who is a world renowned strategist, has structured the model portfolio of Morgan Stanley in his capacity as the head strategist on global emerging markets.
Speaking to reporters, Pelosky said that they are overweight on India with a higher weightage allocated to India at 13.1 per cent in its model portfolio as compared to other countries. Morgan which has investments in India to the tune of $ 1.3 billion (Rs 5,460 crore) is bullish on India, he said.
"We are currently overweight on India with a weightage of 13.1 per cent in the Morgan Stanley model portfolio as compared to 5.5 per cent to Taiwan and 2 per cent to Korea with other Asian markets having a lesser weightage in the model portfolio", said Pelosky.
"Our Global Emerging Markets Asia outlook is cautious withour asset allocation at 70 per cent in stocks, 6 per cent in fixed income and 16 per cent in cash. The fact that the US Federal Bank has cut interest rates has lent unsurity to that market because of which over a long period of time more funds might find there way into emerging markets", said Pelosky.
The Morgan Stanley Capital International (MSCI) Free Index has an India weightage of 9 per cent while the Morgan Stanley model portfolio has a weightage of 13 per cent. While the Pelosky model portfolio has a weightage of 22 per cent of Asia the MSCI Emerging Markets Free Index has an Asia weightage of 34 per cent.
He said that barring the UTI issue and the concerns over fiscal deficit, the Indian economy had strong fundamentals with a reasonably fine current account deficit and stable currency. "We feel that a GDP growth rate of 5 per cent this year is attainable. We also feel that there are some very good corporate stories underlying the macro environment. Indian domestic demand base is good with a stablecurrent account and currency outlook. Thus, India currently has the highest weightage in our model portfolio of emerging markets", said Polesky. "Our basic concern with India is that we have not seen the restructuring of corporates happening and the export and the capital growth does not give a sense of recovery", said Pelosky.
He added that the sectors to look at in India in the next 3-6 months were the pharmaceutical, software and the consumer durables sectors. In the long term the underperforming sectors like commodity and banks, could be looked at, he said.
Pelosky said that an awful lot of wealth had been destroyed in the emerging markets and so the investors were wary of investing in these markets. "It is necessary to bring investors back to these markets as a significant amount of capital is required in these markets. We need to find new pools of money for these markets but the key issue is where will these new pools of money come from into the emerging markets", said Pelosky.
Recapitalisationand restructuring of industries in the emerging markets needs a huge amount of funds flow and this could be done by increasing the risk appetite of the US investors.
Pelosky said that in the future corporates would be compared with their competitors across the globe.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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