India A Different Story, Says Templeton Investment Bond Boss

India would have to be looked at as a separate story from the Asian/Russian example and over the long term, the country may not require to take drastic steps like further currency devaluations, depending on developments in the Chinese economy.

Neil S Devlin, chief investment officer (Global Bond Managers), Templeton Investment Counsel, who manages $14 billion across several markets, is of the view that the Japanese economy was showing signs of strengthening and growth across the US, German and Euro markets was steady.

Devlin, who is currently on a due-diligence exercise for Templeton - meeting brokers and corporate clients nationwide - said from a debt investment strategy point of view, a top down approach would be taken across the major markets while within the corporates, a bottom-up investment strategy would be undertaken.

 

Excerpts of the interview:

On recent developments in Russia/Asia and impact on Indian markets: India will have to be looked at as a separate story from Russia.

The system there collapsed as locals pulled large sums of money out of the banks.

The Indian economy is stronger in nature. In Russia over the last 7 years, the manufacturing sector had halved in volumes and this came alongside problems relating to infrastructure, taxation and parallel economy sectors.

We have a Russian debt fund which has a heavy portion (19 per cent invested in dollar terms) and the fund has been up by 8 per cent after the recent currency devaluation.

On the risks Indian markets face at the moment: The Japanese economy is beginning to improve and we do not feel that China will immediately move in for a devaluation. India thus may not have to look at the issue of a further currency devaluation. If the scenario in Japan improves the pressure on India would lessen. Further the scenario across the US, German markets is improving and the Euro-EMU development is improving.

According to Vijay Advani, president of Templeton AMC (India), two issues relating to mutual funds need to be addressed immediately: Sebi/Amfi would have to take up strongly the issue of a uniform debt valuation norm.

``While the committee has met, the work needs to be got done faster as it affects the entire industry,'' he says. The other issue which would require attention is the clearance of the report on overseas investment by mutual funds.

"We owe it to the Indian investor to allow him for a more diversified range of products,'' he said.

On the due diligence programme for Templeton: We are seeking a positive response, with talks having taken place across major cities.

Regarding investment strategies, for the country a top-down approach would be undertaken while for corporates a bottom-up approach would be undertaken where high-end valuations are attractive.