With tensions around the new Citizenship law and the situation in the Kashmir region not abating, Western Asset Management Co. has decided to reduce its Indian government bond holdings and divert funds to other countries instead.
An affiliate of Legg Mason Inc., the $453 billion investor is going to divert some of its funds to longer-dated Malaysian and Chinese debt, says Desmond Soon, the head of investment management for Asia, except Japan, saying that the company has an overweight position in India bonds – meaning it still has a positive view on the Indian economy.
Economic Times reported that foreign holdings of Indian sovereign debt have dipped to a three-year low, especially now that economic growth is flailing and the newly proposed citizenship policy is making it harder for Muslims to get citizenship is stirring up nationwide protests and creating a mistrust within the community towards the government.
Desmond Soon, a 30-year investment veteran said, “We are in the process of reducing India. It (protests and stagnating economic growth) certainly distracts Prime Minister Modi’s government from making the necessary economic policy and reform to focus on the economy,” pointing out to the uncertainties of normalcy returning to Kashmir after the abrogation of Article 370 last year and the student protests and police brutalities on protesters.
With inflation surging and stagflation looming on the economic horizon, portfolio manager for emerging markets, Ek Pon Tay at BNP Paribas Asset Management says that the central bank – the Reserve Bank of India will probably refrain from interest rate cuts, and this combined with a deteriorating macro environment, is probably why global funds are turning away from Indian bonds.
Famous venture capitalist Tim Draper who has invested in India also criticized the government of choosing one religion over another, saying it made him rethink his plan to fund business in the country.
India choosing one religion over another makes me seriously concerned about my plans to fund businesses there. #freedom #freedomofreligion. https://t.co/WnsGC3BUi6
— Tim Draper (@TimDraper) December 19, 2019
Speaking to Inc42 he had said, “Prosperous governments promote freedom and equal opportunity for their people. They create a fair platform for people to participate in the global economy.” He had entered India by investing around $70 million in start-ups like Cleartrip, Komli Media, iYogi, etc.
Even Microsoft CEO Satya Nadella expressed his displeasure over the government’s stand about the CAA. This criticism by a high profile person of Indian origin pricks holes into the dream bubble of prosperity floated by the regime.
