'Uncertainty in global equity markets is here to stay'

Interview

'Uncertainty in global equity  markets is here to stay'

Nordea is a financial services group in northern Europe, with roots in Scandinavian countries comprising Denmark, Sweden, Finland and Norway, and interests in banking, apart from life and pension solutions. The group’s market capitalisation was 34 billion euros and it had assets under management worth 219.2 billion euros as on June 30, 2013.

The head of Nordic Fund Distribution at Nordea, Jacob Lundquist, was in Bangalore recently. He spoke to S V Krishnamachari of Deccan Herald on global equity trends, mood among European investors and how political uncertainty in India is influencing investment decisions back home.

What is your view on global equity markets?
Equity markets around the world will be uncertain for many years to come, uncertainty is here to stay.

What the investment philosphy at Nordea in that context?
We extract that part of equities where the risk factor is low for our clients, so that they have good returns. We have assets totalling about $10 billion in Nordea 1 — Global Stable Equity Fund — Unhedged since we launched it in 2006. We have outperformed MSCI World Index (representing large and mid-cap firms across 24 developed countries) since then, which has delivered roughly 3 per cent, while we have delivered about 6.8 per cent.

Indian investors expect 15-20 per cent returns from equity investments, generally speaking. How does that compare with Europe?

It’s around 8-10 per cent, we don’t try to tell our investors that they will get more than that. In India, equity investors have been spoiled with high returns for a long time, which we have not seen in our part of the world.

How do European investors view India currently?
Right now, they are sidelining many emerging markets, including India due to low economic growth. Of course, these markets remain a part of strategic asset allocation for Nordea.

Are they perturbed about political uncertainty in India?
India attracts headlines these days (for all the wrong reasons). This makes investors reluctant about India. The trend set in sometime last December.

General elections are due early next year in India. Which political dispensation would investors prefer?
We don’t have any preferences. But we would like to wait for the outcome of election results.

Indian stock markets rallied after 2009 general election results. If there is an encore this time also, won’t you end up with late-moved disadvantage then?
You are right. May be, some investors would start taking positions by March next year, instead of June.

Do you intend to enter the Indian banking sector?
Yes, we plan to be in India in banking soon.

ICICI Prudential’s global equity fund

Bangalore, dhns: Volatility in rupee and Indian equity markets, low growth in emerging markets and recovery in developed countries have resulted in Indian mutual funds offering Indian retail investors to diversify their risk by offering an opportunity to buy global equities.

In this context, ICICI Prudential has launched Global Stable Equity Fund (IPGSEF) that proposes to offer Indians that opportunity. It will invest in Nordea 1 — Global Stable Equity Fund — Unhedged, which in turn will invest in global equities. IPGSEF quoted a study by Bloomberg to say that Indian equities represent merely 2 per cent of the world’s equity assets, leaving 98 per cent of the pie, untapped potential for Indian investors.
The MD & CEO of ICICI Prudential AMC Nimesh Shah said they are not targetting any specific amount through the new fund offer (NFO).

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