By Ruma Dubey
Always be positive and look at life with a “glass is half full” attitude. Now that is easier said that done, right? When the markets keep falling and only sobering pieces of news comes from all ends, it then becomes very difficult to look at things in a positive light. But then that is precisely the point. It is when things get a bit rough that we need to have the ability to look at things, even the most daunting piece of news from a positive angle.
The biggest worry now for the markets, world over, is that of the rising crude prices. But there now emerges a silver lining for India, in this dark looming cloud. The oil countries – mainly the Middle Eastern companies are extremely cash right now as they are raking in oil money like never before. If they had predicted a surplus of $100 billion, they are now looking at over $500 billion. Those are the kind of returns, which these Middle Eastern companies are sitting on. And with so much surplus cash, they naturally need to park it now in such a way that they get good returns and more importantly, their problem of “where to invest” with the surplus cash gets taken care of.
The cash rich countries are looking towards India and are currently stating to be scouting around for making strategic Private Equity (PE) investments. News on the street is that investors from Middle East are very keen on investing in India, with a time frame of 7-8 years and they have the cash all ready, they just need to be told where to park it! Investors from UAE, Oman, Qatar, Kuwait, Bahrain and even Saudi are looking around for opportunities and they have a shopping budget of Rs.10,000-15,000 crore right now.
Why India and why not the other developing countries? India is a growth story today and everyone wants a share of this juicy pie. Despite the inflation and other systemic issues, India is the second largest growing economy of the world. With the markets also having adopted the Sharia laws for investment, they feel more comfortable parking their funds here. In the developed countries, they do invest, yet the comfort zone is not as much as here in India.
And lets face it – any American or European company, worth its name, is investing in India and if these developed countries have such faith in the Indian economy, naturally it means that there is a story here and money waiting to be made.
Another reason why oil money could get converted into PE investments for India is that they generally have the perception that, irrespective of the recession or the slowdown in the US, the impact would not be too great on India as it has managed to now decouple itself better, to some extent, from the US economy. Infact their perception is that any recession in US would be good for India, as it would mean more outsourcing.
One more big reason is that the stock markets and the general overall valuations, to some extent have corrected and are today not as high as they were 4-5 months ago. Hence they feel that if they invest in the markets here today, they will get much better returns, as compared to US or even China.
Also these oil rich countries are themselves in a development mode. Almost all the countries in the Gulf region have embarked on huge realty projects. This has in turn thrown open tonnes of opportunities for Indian companies and Indian workforce. So this development within the oil rich countries is also indirectly benefiting India.
Now the rising crude oil crisis does not seem to be as satanic as it appears to be, right? It’s all just a matter of perception and some logical thinking; life looks good once again!
source s.p.tulsian
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