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Asia fights crisis of confidence

May 4, 2009

Asian nations combine to fight crisis together
Risk averseness towards equities seems to be waning again, as seen by the way stockmarkets across the world have behaved over the past few weeks. Asian markets have opened this week on a strong note as well, with key benchmark indices trading with gains in a range of 2% to 6% currently. Most of these markets were up around 2% last week, even as the swine flu pandemic was said to become a global threat. As reported on Bloomberg, gains in Asian stocks today are being led by reports that the manufacturing sector in China expanded for the first time in three quarters. Also the news that regional policymakers (led by ASEAN or Association of Southeast Asian Nations) have pledged to start a US$ 120 bn foreign currency reserve pool seems to have soothed investors' sentiment.

Mark Mobius, who helps manage US$ 20 bn in emerging market funds at Templeton Asset Management Ltd., believes that this step from the ASEAN (India is not a part of this group) as very positive for reviving investor confidence in the region. He says, "It's not so much the amounts of money being put in, but the concept of these countries getting together and cooperating."

India Inc.'s picture far from clear
As far as Indian markets are concerned, the prevailing sentiment across Asia might help matters given that the quarterly result season has largely been mixed. While sales of most of the companies across sectors have come under pressure on the back of lower consumer demand, profits have been spared on account of cost cutting measures. However, given that this is the full year ending quarter, a large number of companies from troubled sectors like real estate, engineering, energy and metals are yet to announce their results. A better picture of the actual performance of India Inc. can only be gauged then.

India, a bright spot for global auto majors
Three headlines in leading business dailies today speak volume of how the global automakers are trying to eye the Indian consumer to tide over a severe shortfall in demand in their respective countries. First, GM is reported to be launching its mini car in India by December this year and is also planning to increase its dealerships to 250 from 195 currently. Then BMW, the German luxury car marker is eyeing the sports car market in India given that it is all set to roll out its two-seater Roadster Z4 in the country in the second half of 2009.

And third, Japanese auto major Toyota plans to hike its Indian production to full capacity over the next two months. Besides, the company also plans to introduce two models in the current year and add 65 new dealerships by 2010 in its efforts to expand its presence in the country. All in all, even we believe that once the dark clouds hovering on the near term horizon lift, India will once again emerge as one of the most attractive auto markets for domestic and global automakers.

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