The US sub-prime mortgage crisis is likely to pose challenges before the global market in the year 2008. This issue may lead to major debates and discussions on the overall economic policies of the government in the US Presidential poll scheduled to be held next year. The Indian capital market too needs to be watchful, experts have said.
Addressing the 38th annual general meeting of Indo-American Chamber of Commerce, Michael Owen, Consul General of USA, said that the sub-prime crisis is likely to generate a big debate on the economic policies of the government in the US Presidential poll scheduled for next year.
However, he was optimistic that the increasing wages, sustainable inflation and innovative financial and credit instruments will enable the global economy to post a strong growth in the long-term. He said that the US economy may face challenges, but still there was lot of strength in the economy. ?America is still the number one destination for investment?, he said.
The market experts were of the opinion that the domestic capital market needs to be careful as the sub-prime crisis may impact the global economy in the short-term.
Participating in the discussion on ?Recent global developments – impact on the Indian capital market?, Rakesh Jhunjhunwala, partner, Rare Enterprise, said that there may be a slowdown in the Indian software industry and a cut in software spending was expected as a result of the slump in the US economy.
?The US economy is growing at an unsustainable level. The world is underestimating the sub-prime crisis. I foresee the problem in housing to get worse.
The resultant slowdown of the American economy will worsen the crisis?, he said.
Among others, Vallabh Bhansali, chairman, Enam Securities and Andrew Holland, chief administrative officer, EVP, DSP Merrill Lynch also participated in the discussion.
The panelists were of the opinion that the US poll and the forthcoming Olympic Games in China need to be watched in order to chalk out a road map for the domestic capital market.