Global investors grow cautious towards India
By siliconindia   |   Thursday, 08 January 2009, 20:45 IST   |    5 Comments
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Bangalore: Experts and industry leaders feel that the 'Satyam scandal' will put India's reputation as one of the much sought after investment destinations at risk. "This incident will contaminate the view of global funds on investing in emerging markets generally and India specifically. However, India dedicated funds may try to defer as most of them are company specific investors and are more willing to consider Satyam as a one off case," says Seth R Freeman, CEO Chief Investment Officer of EM Capital Management, a U.S. based hedge fund, in an article published in a daily. Foreign Institutional Investors (FIIs) are also growing cautious towards investing in India. "This is India's WorldCom or Enron. It will certainly make FIIs more cautious about pouring money into India," DNA daily quoted a FII firm head as saying on the request of anonymity. Echoing this view, Fitch Ratings' Managing Director Amit Tandon said that the developments in Satyam would have an adverse impact on the stock markets and on investor sentiment, in the short term. It also seems that the whole system of corporate governance in India is in the defendant's dock. Jigar Shah, senior vice-president at Kim Eng Securities, told Reuters more companies in India are likely to come under scrutiny and there is a possibility that investments in India will be affected. However, Global rating agency Standard & Poor's is not extremely pessimistic. It says that such a negative sentiment will remain only for a short term. "No doubt on the fact that this will definitely send negative signals to the investor community in the near term. However, over a period of time, the confidence will be restored in the market as market regulator Securities and Exchange Board of India is expected to take appropriate actions to restore discipline in the market," the agency Region Head Ravi Mohan said. European investors also seem to still remain upbeat about India despite the biggest accounting scandal. Though shaken by the incident, some investors say they will wait for signs of widespread malfeasance among Indian companies before deciding whether to change their investment policy on India. "We won't change our view of India, unless we find more evidence that there is a systemic problem and that's not the view of our emerging markets desk," said George Dallas, Director of corporate governance at UK-based F&C Investments. In 2007, Satyam had earned the top spot in two categories in the Investor Relations Global Rankings by MZ Consult.

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