Published Date:
10-Jan-2012
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shipping-exchangeQ: What did you make of the Merkel - Sarkozy meeting that went by and is it at all a big trigger for the markets?

A: I think it's just a continuation of a number of others. We have seen this great soap opera over the last two months of the two getting together and it is even called 'Merkozy' now. Bit by bit they are seeming to come towards some sort of conclusion, they have managed to survive the Christmas break where there is low liquidity by bringing the ECB into action. But the markets are still intensely frustrated that things are happening quite so slowly and this is going to continue until they do come up with some big bazooka.



 Q: How do you see the movement in the euro then?

 A: The euro, which was quite strong throughout much of the early part of the crisis, has now seemed to ease off and there does seem to be quite a lot of sellers in the market. That's slightly related to the strength of the dollar. We have seen continuous run of good news coming out from the US and of course if one is strong the other tends to be weak and there has been a movement to the dollar because of this apparent strength in the US markets. The dollar is not really reacting these days to the interest rates cause there are no interest rates.

So you are almost seeing a slightly reverse move at the dollar now whereas in the old days the currency would react to interest rates, now it's reacting much more to economic situation, so we are seeing a strong dollar and a weaker euro. It does seem to be a little bit difficult to imagine that the euro can be strong with all of this going on. It will probably continue to see further weakness as we go on through this crisis.


Q: What are your thoughts on India as a market and how do you see the first half of 2012 panning out for our markets here?

A: What's happened is that we have had a really good run in the emerging markets (EM) a little while in the last couple of years and we are seeing a little bit of hangover from that. High growth is great when things are going well but when it comes down from high growth then a number of the issues start appearing. There is a famous quote from Warren Buffett: 'when the tide goes up then you find out who is wearing trunks and when waves start to slow a little bit then you start realizing that may be there isn't too much depth here'. May be there are some restrictions in the economy here. Many of the EM's, not just India, are suffering at the moment but I can't help feeling that what goes down must come up. Fundamentally these are still growth markets, they are not going to go up in a straight-line, they are going to have a high inflation and we are in the middle of a high inflation. So really, for investors in EM's life is not going to be as easy as it used to be but there is still place to be when the economies turn around.

So I would say they are going to see an up year this year in the equity markets in EM's but may be not by very much. The real recovery is still perhaps some time away.