Global funds bearish on India

Global fund managers are bearish on Asia, India and China in particular, in terms of growth and investment in equity markets.

A survey of global fund managers, conducted by Merrill Lynch last month, has kept India and Chile in the underweight category among global emerging markets with a negative weightage of 63 per cent.

The survey indicates that among the Bric (Brazil, India, Russia and China) countries, investors increased their overweight to 84 per cent for Russia from 67 per cent a month ago.

In contrast, underweight for India has increased dramatically to 63 per cent from 33 per cent a month ago. Chile, however, showed a modest decline in underweight from 71 per cent a month ago to 63 per cent.

India has been the least preferred destination among the Bric countries, with global emerging market investors' underweight for the country has risen to 47 per cent for the next 12 months.

This is considerably a higher underweight compared with 33 per cent a month ago. Brazil has the lowest, 26 per cent overweight, while Russia has an overweight of 84 per cent. China, however, follows India with an underweight of 58 per cent.

The survey is bearish on global growth, with profit from global emerging markets expected to touch an all-time low in 2008, according to the survey.

The survey said 61 per cent of the fund managers were bearish on global growth, accounting for a new 2008 low, and 70 per cent were bearish on the China growth, indicating a four-year low.

Among the developed markets, investors were overweight for the US and Japan, while were underweight on the European markets.

About 23 per cent of the fund managers were overweight on US equities, the highest since August 2001, while 29 per cent were underweight over the Eurozone, the highest-ever level.

Global emerging market investors were more pessimistic on corporate profits in the next 12 months, with 68 per cent of the participants seeing profits deteriorating slightly, while 21 per cent said they would decline strongly.

Global emerging market investors presented a mixed opinion on growth in corporate earnings of 10 per cent or more for the next 12 months.