Mumbai, Feb 19: HSBC Capital Markets India chief executive officer Shaun Browne said on Thursday that the time was right for cash-rich corporates to go shopping in south-east Asia and acquire companies hit by the Asian flu.Speaking at the Ficci seminar on "Southeast Asian meltdown: the India response" in Mumbai, Browne said that promoters in these countries would sell to corporates in return for "hard" currency.
Browne cautioned domestic corporates against going in for external- commercial borrowings (ECBs), unless they had strong foreign-exchange inflows by way of exports. "Only Indian corporates with strong forex inflows should go in for ECBs," said Browne. They should borrow only in the domestic market, until hedging costs come down, he added. The six-month forward premium (annualised) is ruling at 14.5 per cent.
Browne said the time was ripe for companies to go in for fixed-rate borrowings through bonds and syndicated loans. "If through necessity, corporates need equity, they should look at privateplacement since there are a number of cash-rich people in the country who would be willing to invest," said Browne.
According to him, investors who bring in foreign-direct investment (FDI) are reconsidering some of their plans for the country. Some foreign companies are even reviewing their plans, Browne added. He attributes this to nervousness after the south-east Asian currency crisis. "There will continue to be investor-nervousness for some time," said Browne.
Browne said that the domestic economy was likely to be in for a period of volatile interest rates and currency fluctuation. "India will witness increased international competition through exports and imports in the form of dumping, if it is not careful," said Browne. "The availability of credit will be tight over the next few months," he added. On the impact of the south-east Asian meltdown on the domestic economy, Browne said: "It will be naive to think that that it will not have any impact on India. But India is relatively safe...Indianelephant can go faster than a tiger."
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
