Many global investors are still somewhat exuberant about India’s prospects after Narendra Modi became the prime minister, but some of them are beginning to worry in the absence of results, said legendary maverick investor Jim Rogers.
In an interview with ET, Singapore-based Rogers, who co-founded Quantum Fund with another celebrity investor George Soros in the 1960s, got candid when he said he is buying India’s stock index while staying away from gold for a while. Excerpts:
How do you rate the performance of the new government under Narendra Modi?
Economics in One Lesso... Best Price: $2.43 Buy New $7.43 (as of 12:35 EST - Details) So far, Modi does not seem to have produced results, which we all expected him to do. He said a lot of wonderful things, but so far nothing has happened, other than a lot of public relations.
Do foreign portfolio investors share your view? What is the mood among these investors because their inflows have slowed in the last two months?
The mood about India is still somewhat exuberant because Modi is still very popular since the last elections. But some people have The Road to Serfdom: T... Best Price: $3.06 Buy New $1.99 (as of 03:40 EST - Details) begun to worry about how long this honeymoon period will go on.
Modi has not done much to change the economic outlook of India. People are waiting to see when Modi is going to change its economic policy, or start opening up of India to outside world. The expectations are very high because Modi at some point of time has to come up with some concrete proper actions.
What will be the impact of interest rate hikes by the US Fed next year on markets?
Most central banks follow the market, and the market dictates what has to happen. In the US, interest rates have already started going up a bit, and they will continue to go higher, in my view. The US central bank will be forced to cut back its bond purchases and probably they will, and that will lead to higher interest rates.
At some point, we are going to have interest rates that will affect markets though that may not happen for a while. But when it happens, central banks will panic, the US central bank will panic and then they all will again start buying bonds in order to calm down the markets. Then again, interest rates will come down for while, and there will be bubble in the markets.