Christopher Douglas, Director, Manager Research, Asia-Pacific, Morningstar

India Infoline News Service | Mumbai | March 19, 2017 08:00 IST

A stable business-friendly government is typically positive for markets, and India has been able to take advantage of this. I don’t believe it’s a mirage, and think it is a sign of robust economic development, but that’s not to say that it will necessarily lead to strong share market performance. Much of the positive news could be priced in.

Christopher Douglas is the Director & Manager Research of Asia-Pacific, Morningstar. Chris is Director of Manager Research Ratings with Morningstar, a leading global provider of independent investment research.
 
Chris is responsible for leading qualitative research on Asia-Pacific fund managers (excluding China, Hong Kong & Singapore) and their funds.
 
Chris first joined the Manager Research Team at Morningstar in 2006, and was jointly responsible for the Australia/New Zealand team from 2009-2014. He then relocated to Chicago as the Americas Leader for Morningstar’s Managed Investment Data Group, before rejoining Manager Research for this role in October 2016. Before joining Morningstar in 2006, Chris worked in a variety of analyst roles, including as an analyst in the investment team at ASB Group Investments in Auckland, as an analyst in the Performance team at AllianceBernstein in London and as a fund manager assistant with F&C Asset Management’s UK equities team. He started his career in 1999 at New Zealand Financial Planning.
 
He has a Bachelor of Commerce degree from Lincoln University, New Zealand.
 
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets.
 
Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $200 billion in assets under advisement and management as of Dec 31, 2016. The company has operations in 27 countries.
 
Replying to IIFL, Chris said, “A stable business-friendly government is typically positive for markets, and India has been able to take advantage of this.  I don’t believe it’s a mirage, and think it is a sign of robust economic development, but that’s not to say that it will necessarily lead to strong share market performance. Much of the positive news could be priced in.”
 
Emerging economies spread across South East Asia will act as a life support for the sulking/saturated markets of Europe and US. Do you agree?
 
No, I do not agree. There is a tremendous amount of growth as well as opportunity in South East Asian countries, which will continue to have a positive impact on global trade. However, just like South East Asia is made up of diverse countries and economies, so too is Europe and the US. There are many positive developments happening in these markets as well, especially in the technology, healthcare and energy sectors.
 
How South East Asia can stop itself from becoming the dumping ground for the West. What policies both West and East should adopt to keep the balance intact?
 
I can answer this question from a financial market perspective, but I am not an expert in foreign trade. There has been a tremendous amount of financial regulation happening across the West in recent years, with a real focus on retirement savings. Here, policies have been directed towards fund managers and financial advisors to ensure they are acting in their clients’ (the investors’) best interests when recommending a product for them to invest into. This means greater transparency regarding how products are sold and how intermediaries earn their money from selling these products. These regulations have led to a focus on fees and product suitability. We believe this can only be good for investors and expect to see these policies spreading continuously around the world.
 
Asian markets witnessed a staggering growth in 2016. What are the major roadblocks that could hinder this growth in the years to come?
 
All markets go through periods of peaks and troughs. It’s difficult to know what roadblocks could hinder growth, and it all depends on the particular country’s geopolitical environment. Many Asian countries are reliant on global trade, and any slow-down in offshore markets could have a direct impact on future returns.
 
Political stability has provoked the Indian equity market and it has touched magical numbers. However, domestic investors are wary of this trend. Do you think this psychology of the domestic traders is good for the Indian market?
 

Investors like business-friendly governments, and this has very much been a tail-wind in India. Domestic investors are long-term investors in a market and can be wary of markets being pushed to extreme valuations by offshore investors, and as we know this can quickly undergo a reversal. I have no insight into where the domestic Indian market will be positioned in 2017, but I would say domestic investors are well-placed, and have a balanced view.
 
How do you analyse the honeymoon of Indian equity market? Is it a mirage or a sign of robust economic development?
 

As I said above, a stable business-friendly government is typically positive for markets, and India has been able to take advantage of this.  I don’t believe it’s a mirage, and think it is a sign of robust economic development, but that’s not to say that it will necessarily lead to strong share market performance. Much of the positive news could be priced in.
 
Do you think the new GST regime will turn India into an investors’ heaven?
 
We have seen the GST regime leaving a positive impact in many countries that have introduced it, including Australia and New Zealand. It allows a fair and equal tax to be levied on all consumers. But, I am not sure what impact this will have on markets.
 
Surging protectionism in western markets and Fed rate hike which has been highly applauded by the market are contradictory in nature. Which factor will impact the growth of South East Asia in the forthcoming years?
 
There are a number of risks in the market that investors need to be aware of. But there are also plenty of opportunities. Despite the surge in protectionism, many companies continue to operate as truly global firms and South East Asian countries will continue to benefit from this. Also, as these countries grow and develop, there will be an increasing amount of domestic opportunities to support the local economy as well. Whilst there may be some hiccups in market performance over the coming years, there still remain good prospects for investors globally, including those in South East Asia. But as always, it pays to be diversified, invest with a robust time-tested process, keep a mind on the costs of investing, and take a long-term perspective.

Disclaimer: The contents herein is specifically prepared by ‘Dalal Street Investment Journal’, and is for your information & personal consumption only. India Infoline Limited or Dalal Street Investment Journal do not guarantee the accuracy, correctness, completeness or reliability of information contained herein and shall not be held responsible.

 

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