India could be one of the most attractive markets in 2013 according to ING Investment Management senior emerging market strategist, Maarten-Jan Bakkum.
Bakkum said that prospects for the BRIC markets look more positive in 2013, as an upswing in Chinese economic growth will be beneficial to commodity exporters Russia and Brazil. He added that the latter two markets have been under pressure, partly due to government intervention and partly due to the slowdown in China. But he commented: “There should be considerable scope for both Russian and Brazilian stocks to benefit from the accelerating Chinese economic growth.”
Looking at other emerging markets, Bakkum said: “The outlook for emerging markets as a whole has improved significantly now that the world economy and China in particular are showing clear signs of recovery. Once the ‘emerging markets’ category is attracting more interest from investors again, the large, well-known markets will benefit especially. For that reason, South Korea should also prove very promising in the coming year.”
On India, Bakkum said it was less sensitive to events in China. “What matters here are that consumption and investments pick up again, and that the reform process regains momentum. Inflation will also have to come down further, so that interest rates can finally be cut. The good news is that economic growth has clearly started to recover.” In addition, Bakkum said that the Indian government has also been able to implement some major reforms recently and the central bank has indicated that it will probably cut interest rates in January.