Emerging markets investment guru Mark Mobius says India must take advantage of the ongoing trade war between the US and China and believes the country could benefit from the depreciation in the rupee.
In the backdrop of rising crude oil prices and the US Federal Reserve increasing interest rates, the rupee has fallen over 13 per cent this year, tracking weak currencies across emerging markets.
Mobius, who left Franklin Templeton earlier this year to set up Mobius Capital Partners, feels much of the currency depreciation may be over now.
"I think a lot of this (depreciation) is already over. Its high time India start taking advantage of the weak rupee. With the rupee weakening, exports become more competitive," said Mobius, speaking at the Morningstar Investment Conference in Mumbai on Tuesday.
The US and China have engaged in a bitter trade tussle, with US President Donald Trump slapping import duties on a range of Chinese products, and the Asian country has retaliated with tariffs of its own on US goods.
"Its about time India takes advantage of the trade war," said Mobius, adding India should boost manufacturing in the country and speed up the approval process.
With much of the rupee weakness behind us, Mobius says the government must give exports a fillip and also ease import of components, which should help drive more manufacturing and exports of products.
Foreign institutional investors have been net sellers in Indian equity and debt markets this year, pulling out over Rs 94,200 crore in total, according to data from depositories. The pace of their pullout has only increased in recent months amid rising trade tensions and currency risks, and US interest rates have gone up.
The liquidity crunch in the debt market, in the wake of the crisis at troubled infra financier IL&FS, has also led to investors withdrawing from debt funds.
Mobius says, at such a juncture, India should make it easier for foreign money to flow into the market and set up a "one-stop shop" for investors.
The rising crude oil prices have not only put pressure on the rupee but also the country's current account deficit. Mobius feels the crude oil price could head towards $100 a barrel and India needs to "accelerate transition to other sources of energy".
Mobius still sees price to equity value in emerging markets compared with the developed counterparts. Mobius also observed that typically EM bear markets had only averaged seven months and the upside was incredible.
