News: 'India among top Asia picks'

(BL 09/09/2006) Kolkata - An international survey of 175 fund managers, conducted by Standards & Poor's, has placed India with a score of 2.8 compared to 2.5 in the case of China. It also suggests that emerging market stocks now account for a high 16 per cent of all global equities.

According to a worldwide survey, India is the second most preferred market among the BRIC (Brazil, Russia, India and China) countries after Brazil.

Among the Asian equity markets, India has grabbed the third position after Korea and Taiwan, S&P said in a report.

The global ratings major, which sought to cover aspects like market structures and regulatory and trading environments, asked respondents to rate 27 markets, using a scale of 1-5, where 5 would be the `most developed' on par with a market like the US.

The survey, which has examined the broad emerging market landscape, has further considered the roles played by government regulations on investment, public/private partnerships, structured finance and project financing.

A number of emerging nations are quickly scaling up the economic value chain, increasing the velocity at which they are changing and sometimes attracting foreign equity investment, the report, authored by Alka Banerjee, V-P, Index Services, S&P, has mentioned. It also includes the findings of the survey.

Emerging market equities are being noted by both retail and institutional investors, who are including them in their portfolios.

"Global investors are increasingly availing themselves of these investment opportunities, often higher rates of risk notwithstanding," S&P has pointed out. The report has further talked about the changing definition of emerging markets, the factors behind their growth (in terms of both size and liquidity) during the past 25 years and the reasons for the differences in the performance of various markets.

The distance still to be covered before an emerging market can be considered fully "developed" has also been mentioned. The S&P exercise has been done ahead of this year's meeting of the World Bank and International Monetary Fund in Singapore.

Here are some of S&P's observations about specific markets, including the BRIC countries:

Brazil established the Novo Mercado as part of the Bovespa exchange, where companies meeting certain rigorous standards of reporting and listing are listed.

South Africa focused on unbundling cross holdings among its companies, providing for transparency in the ownership structure.

India's trading cycle that would once extend to T (Trade day) +14 days between various exchanges, has been streamlined to T+2 days.

Russia has focused on establishing a futures exchange and stronger regulatory control.

China recently embarked on a large programme to transfer shares from Government hands to shareholders by a process of stock bonuses.

This enhanced share availability has substantially increased liquidity of the A-share market. Most locally listed shares of Chinese companies are called A-shares.