When the annual CLSA Asia-Pacific Markets conference was held this year in Hong Kong about 25 fund managers from India turned up at the event. For those who have been attending the conference for some years now, the presence of so many Indian fund managers was surprising. Every year only about half-a-dozen of them grace the event, attended by the top-dogs of the investment fraternity from across Asia.
The sudden interest in the CLSA conference is not without reason and perhaps points to an underlying shift in the investment landscape in India. As the collapse of the global economy in 2008 and the subsequent free fall of equity markets around the world (including India) proved, investors could now afford to ignore the global macro situation at their own peril. Indian equities have done well to bounce back since then, but the lesson has not been lost on Indian fund managers ? despite the vociferous claims of some decoupling theorists suggesting otherwise.
?Fund managers are now increasingly spending more time to understand global macro,? said Shankar Sharma, vice-chairman & joint MD, First Global. According to Tridib Pathak, director ? equities at IDFC Asset Management, over the past two years, all asset classes have increasingly become a function of the global macro situation and, more importantly, of the Fed (US Central Bank) actions. ?The tipping point was the global financial crisis of 2008.?
Several instances prove that our markets have been closely mirroring global cues in the past two years. Our markets rallied in lockstep with global equities when the first round of stimulus was announced by the US government in 2009. Again, in 2010, our markets have tanked off and on following negative newsflow from some European nations. ?Our markets are now driven by global macro,? observes Pathak.
That may not necessarily have translated into sleepless nights for our investment folks, but they are definitely losing sleep over it. Indeed, it?s not unusual to find bleary-eyed analysts and fund managers logging on to their laptops first thing in the morning to catch up with the action in other markets. Several can be seen hooked on to their Bloomberg terminals well over an hour before the Indian markets start trading.
The eagerness to analyse the previous day?s performance of the US equities (which close at around 2.30 am India time) and track the happenings in major Asian markets such as Singapore (opens at 6.30 am India time) is understandable as these indices often indicate how our markets will react or open that day. European markets open at around 1.30 pm India time.
?Spending about half an hour each day tracking global markets has become a necessity,? says Saurabh Mukherjea, head – equities, Ambit Capital, adding that fund managers now could be spending nearly a third to a quarter of their time tracking the global markets and global economy. And this time spent on monitoring global events is only likely to climb in the future, say industry observers.