Mark Mobius, executive chairman, Templeton Emerging Markets Group .
Dec 02, 2015 | Source: Economic Times
On RBI's comments after the policy meeting on Tuesday : I think there are good chances of interest rates coming down further, because if you look at the difference between interest rates and inflation, you will find that inflation numbers are significantly below interest rates. If the inflation continues to remain where it is, rates are likely to fall further. If you look at the inflation basket of India, it's probably heavy weight on food. If you look at the previous administration, you will find that there were subsidies on rice and wheat. Now with subsidies being taken away from the farmers, they may grow more vegetables which may bring inflation lower giving further room for the RBI to consider monetary policy action.
On the upcoming US Federal Reserve's policy meeting: I am sure many of the Fed governors may be asking why we are going for an interest rate hike because there is no inflation and employment situation is also not great either. So, there is going to be a big dilemma on on interest rates. However, if the Fed considers increasing rates it's going to be a small one.
Impact of rate hike on emerging markets: To play safe on the markets, I would say buy US dollars and get out of the emerging markets, and this is one of the major reasons why there has been shrinkage of money in the emerging markets.
Does foreign investors' overweight position on India make it risky? I don't think there will be outflows from India. You have to remember that people who are overweight India are underweight emerging markets. What you have to look at is — will people come to emerging markets in January? If that happens, India will attract flows despite being in overweight position.
What are your top picks for 2016? There is transformation in the global economy due to use of internet and the spread of smart phones. People can do things in a second today what it took days earlier to accomplish. In India, I like technology because that's growing. I also like consumer sector and affordable housing segment.
Will the downturn in China affect the region? Everyone knew that China will not continue to grow at 10%, but I don't think India will get impacted because India will make up for the slack in demand though the scale may be much smaller now.