INVESTOR'S PARADISE

Tuan Huynh, Director & CIO, Deutsche
Bank,PAM


Globally, there are clear signs of risk averseness and analysts worldwide are divided on whether the worst is over and what would be the economic outlook going forward. However, Tuan Huynh, director, chief investment officer — India and China, Deutsche Bank, PAM (private asset amangment) is of the view that investors investing in countries like India have not much to worry. Mr Huynh is of the view that returns would continue to be handsome, but the investment horizon may become a little longer. Based at Singapore, Mr Tuan was in India recently to take stock of the situation.

Wealth creation has taken a pause after years of secular growth. What is the strategy going forward?

The year witnessed a tough investment environment. Some asset classes gave negative returns. Markets were going up 40% every year and suddenly the meltdown occurred.

Clients are now raising questions as they are concerned about developments. We do believe that there are no clear answers but there is need to take a systematic approach to investing.

What are you advising your clients?

Our investment focus is India specific but for the purpose of diversification, we invest across different asset classes like equity mutual funds, real estate, structured products and commodity. To further diversify our client's portfolio from country specific risk, we are advising them to invest in overseas assets.

For instancee, investing in Latin America to benefit from high commodity prices. Further, there is a need for change in allocation on a continuous basis.

Given the prevalent scenario, what is the risk appetite among your clients?

The portfolios are managed on the basis of risk profile of different investors like having a conservative approach, moderate or balanced approach. At this point of time, we are largely neutral on equities and bullish on assets class like soft commodities and precious metals.

As an investment theme, we continue to believe that soft commodities like corn, soya would still giving good returns due to demand – supply factors. Apart from that, we believe that precious metals like gold would also generate good returns for investors in times to come.

Why do you think markets have not yet bottomed out?

Some of the reasons for our concern are the fate of global financial players. The brief rebound of global markets from mid-march happened due to the Bear Stearns bailout which somewhat took away the systemic risk.

But in June, concerns on financials continued with downgrading by S&P of Merrill Lynch, Morgan Stanley and Lehman Brothers.

What is your macroeconomic outlook on India?

Despite the strong reading for the first quarter, we still feel that the economy will slow due to a combination of rising inputs costs, tight monetary conditions and capacity constraints.

The manufacturing sector has been slowing for several quarters now. We think that RBI's shift to tightening money supply is not just a reaction to higher energy prices but necessary to bring domestic demand in line with a constrained supply-side.

Would this affect your investment decisions in India?

The kind of growth that India has witnessed is one of the best. Going forward there are some risks to economic growth, which would certainly slow the pace of growth.

We have downgraded our GDP target on India. But even then, it will continue to post better growth as compared to other countries. Typically, at this point of time, we are looking at higher returns on a longer investment horizon
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CA. VIKAS KAPAHI
TREASURER
JAB WE MET CA
REDEFINING PROFESSIONALISM