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Outlook on Indian economy still positive, says Julian Mayo

Updated : May 31, 2018 08:49:48 IST

The overall outlook for the Indian economy remains relatively positive, said Julian Mayo of Fiera Capital.

Speaking on emerging markets he said, "There is a bit of uncertainty going on at the moment as you said surrounding the dollar and some of the external imbalances of some other emerging markets but overall the outlook is still relatively positive because you have got positive earnings growth momentum in emerging markets."

"You had a growth recession between 2011 and 2015 in the assets class, you have two years of a recovery of that but the trend is still positive there. Corporate profit outlook is still good at moment. You had a big spike in profits last year after profits recession over the previous 4-5 years. Our outlook continues to be good double digit growth across the asset class for this year and probably into next year as well," he added.

Speaking on emerging market currencies he said, "You have pockets of instability within emerging market currencies but for the bigger emerging market currencies and I am talking here about China, Korea, Taiwan and India which are the four countries that make up two thirds or so of emerging markets benchmark, I think the currencies are in reasonably good shape. So, overall emerging market currencies are undervalued. At the moment the dollar is strong but it is not as if you have got dollar strength versus EM weakness in a polarised basis that you sometimes have across emerging markets."

"What you have at the moment is, you have dollar strength against all currencies, against the euro as well and almost the main driver of this is the relative performance of the US economy against the euro zone economy - one of which seems to be accelerating and the other seems to be slowing down a bit and therefore possibility of rates increases in the US and that is pulling the dollar up against the euro. So, as an asset class EM currencies are falling because of more of a collateral damage reasons than for EM specific reasons with one or two exceptions," he further added.
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