Meltdown pushes investors to EMs: Merrill

Meltdown pushes investors to EMs: Merrill

New Delhi August 17, 2007

The US subprime crisis may have spilled over to the worldwide equity
markets, but all is not lost with a new survey of fund managers from
across the world indicating a major shift toward emerging markets.

While fund managers have turned more risk averse in light of the
global market instability, they believe equities still offer value,
especially relative to bonds, according to Merrill Lynch's Fund
Managers Survey for August.

The survey indicated a shift away from the US with 29% respondents
saying emerging markets offered the best corporate profit outlook of
all regions overtaking the Eurozone, which has been the favoured
region throughout 2007.

Although the survey did not specifically mention India, the country is
one of the major emerging economies. The country's stock market
benchmark, Sensex, however, has fallen in line with the global trend
in the past few days.

Merrill Lynch said investors believed that the quality of earnings in
emerging markets, while a concern, was improving although it was
deteriorating in the US.

The managers said valuations were seen as more attractive and fewer
respondents believed emerging market equities to be the most
overvalued. "Only a net 8% hold that view, while a net 19% see the US
as the most overvalued region," it said.

In the broadest snapshot of global institutional investor sentiment
since the sharp rises in credit spreads and equity market volatility,
11% still regarded equities as undervalued, while 41% thought bonds
are overvalued.

A total of 181 fund managers, managing a total of $599 billion,
participated in the global survey from August 2 to August 9.