There are about 1.30 trillion $ of money that is earning negative returns globally, in the bond markets, there are about 12 Trillion $ that have turned negative as demand surged for quality papers. This is a very good opportunity for countries like India as there are very few countries today with quality papers available, that are having high returns. Chances are that, a major part of these funds can find their way to India. If that happens, it will be a good advantage to stock investors too, as some of it will also move into Equities which will increase the valuations higher.
In countries like Japan, which is the second largest economy today by valuations, companies are sitting with huge cash reserves, not finding ways to deploy them in their country. In Japan these days, shareholders meetings more than 1000 shareholders turning up, which was earlier only in the higher 100’s in number. All because of the concern that, growth is not happening and their businesses are idling capital. These shareholders have now began to ask the managements on the plans for deploying the funds and they have become specific in asking how much is going to be allocated to India.
World over, pension funds have a certain percentage of their funds to be deployed in emerging markets. While among the Emerging markets, India is the leader both in current performance and potential, which is going to attract a major chunk of the allocations.
India is becoming the next economic super power, giving best of returns potential both, from its debt markets as well as the Stock markets. With so much of funds likely to be routed to India, the Equity valuations are going to be far higher than what we have now. All these money are going to chase the same small number of quality stocks available in our country, which will push the PE multiples of those stocks. So, people can leave of the worries of high PE’s multiples and just stay invested in the quality businesses of India. It is boom time for Indian markets, capitalize on this greatest opportunity.
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