Their Story: NRI-speak on market volatility

Lokeshwarri S K | Updated on March 10, 2018 Published on January 24, 2016

The crisis in the financial markets is making many re-think their portfolio allocations. Lokeshwarri S K finds out how Non-Resident Indians view this phase

What they feel down under

Adityan, along with a couple of friends, runs a management consultancy in Australia. He moved to Australia about seven years ago.

In Australia, he has parked his savings in the superannuation plan, Super, that helps him build a kitty for retirement. He has, of late, stopped buying Australian stocks, given the crash in commodity prices over the last two years. “I’ve stopped putting money into Australian stocks as Australia is joined at the hip with China,” he says. A slowdown in China is likely to have a major impact on Australia as the country is a major commodity exporter (iron ore, coal, and aluminium, among others) and a third of Australia’s exports are to China.

Adityan is, however, more bullish on the prospects of India. “I want to invest more money in India as it is going to be a major engine of growth in the future,” he explains. He takes a bet on India by investing in bluechip stocks through mutual funds. “I would also like to buy energy stocks now,” he says. But wouldn’t that be risky? “Given the recent crash, these stocks could see a bottom soon,” he elaborates, on his contrarian strategy.

He would, however, like to wait for at least a year before investing in real estate in India as he thinks prices can correct further here.

Since he has to remit money to India frequently, he tracks the rupee quite closely. At least once a week he checks on the rupee movement to decide on his money transfers.

The higher interest rates in India are an attraction for parking money in Indian instruments. He prefers post-office deposits that offer interest rate that is at least 400 basis points above that available in Australian fixed-income instruments.

View from the big apple

Venkatesh is currently working in New York as business analyst with Cognizant Technology Solutions. He has been living in the US along with his family for the last five years.

Most of his savings are invested in India. He has invested in mutual funds through systematic investment plans, fixed deposits and directly into stocks. His investment in US stocks is indirectly through the sum he has invested in the 401 (k) plan. This is a retirement account into which a percentage of the pay cheque is deposited by the employer. These funds are then invested in various assets selected by the investor.

So, what does Venkatesh think about the ongoing turbulence? “I want to put some more money into stocks now,” he says. “Given the fall, the PE multiples are beginning to look quite attractive and I want to move larger amounts into Indian equity now.”

His fixed income investments are mostly in India due to better interest rates in India.

What does he think about the Modi government? “This government is better than the earlier ones, but we probably expected a bit too much,” he observes pragmatically.

He thinks that earnings can improve in the coming quarters. Venkatesh is, however, quite optimistic about the US. “The improving jobs situation infuses optimism,” he says.

Arabian storm

Mohan is a Non-Resident Indian who has been living in the United Arab Emirates over the last two decades. He is currently working with a large multi-national corporation in the oil and gas sector. His wife, Meena, does freelance work for the British Council.

Those in the Emirates are feeling the pinch of falling crude oil prices. OPEC’s unwillingness to cut down on crude oil supply and the slowing global growth have dragged crude oil prices lower from over $100 in mid-2014 to below $30 a barrel; increasing the level of insecurity of those employed in the oil and gas sector in the UAE.

“We have all our investments only in India,” says Meena. The uncertainty has increased in recent times with the reduction in capital spending in oil and gas. Oil companies are tightening their belts in an effort to grapple with falling realisations. This is resulting in job losses. “People are scared about taking even one week’s leave. You might not have the job once you return from your holiday,” says Mohan.

With companies getting more cost-conscious, there are fewer freelancing opportunities available, says Meena. The increases in the money paid for such jobs have also been going down over the last couple of years. She feels that the pay increases are also not keeping up with the increase in cost of living.

Mohan watches the rupee quite closely for planning his remittances. Since the currency is now falling, not just him but many of his friends also want to move money into India. “The regular monthly remittances are done by us as a routine, without taking the rupee into account. But when it comes to transferring larger amounts, we do wait for a good exchange rate,” says Mohan.

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