India’s ‘twin deficits’ concern for Fidelity’s Chanpongsang

Fidelity’s Teera Chanpongsang has said he remains “concerned” about India’s increasingly weak currency and potential stagnation in infrastructure projects because of forthcoming elections.

The manager of the group’s £10m Emerging Asia fund, said the weakness of the rupee against the dollar was becoming a greater concern - particularly as India imports its oil which is priced in dollars.

The manager said oil imports account for roughly two-thirds of the current account deficit in the country with gold imports accounting for the other third.

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He added while the government had implemented curbs to slow down gold imports this would not be enough to offset a rise in commodity prices.

“A key worry is that the oil price is rising again and the rupee is weak versus the dollar,” Mr Chanpongsang said.

“This will more than offset measures to limit gold imports.”

However, the manager said he was still “confident” of GDP growth of 5 per cent this year adding that he favoured phramaceutical and IT companies as well as “selected high quality” banks.

Elsewhere, Mr Chanpongsang said Association of Southeastern Asian Nation (Asean) countries, such as Thailand and Indonesia, had seen “big outflows” in recent weeks as markets continued to focus on discussions about the unwinding of quantitative easing.

“Within the Asean region, Indonesian equities are a bit oversold now but I am still conscious of government actions and remain underweight the country,” he said.

“I have concerns about weakening consumption in Thailand but I continue to hold some telecommunication companies. I remain underweight Malaysia. Interestingly, the market has shown resilience in previous emerging market sell-offs but this week we have seen some strong selling.”