The Hindu : Business : SEBI chief warns of volatility in Asian markets

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Saturday, Nov 24, 2007
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SEBI chief warns of volatility in Asian markets

Special Correspondent

Asks analysts to have fair assessment of stocks

— PHOTO: KAMAL NARANG

MARKET ALERT: M. Damodaran (left), Chairman, SEBI, with Bill Kwok, Chairman, ASAF, at a conference in New Delhi on Friday.

NEW DELHI: Securities and Exchange Board of India Chairman M. Damodaran on Friday warned Asian economies of the likely volatility in their markets owing to decisions of “certain categories of investors from matured markets”.

Speaking at a conference organised by the Asian Securities Analysts Federation here, Mr. Damodaran said: “There are certain categories of investors from the matured markets, where returns are not as good as in the past... So for greener pastures they have landed in our backyards because our markets give them good returns... They will abandon our markets if they [markets] don’t give them good returns... This will lead to volatility in our markets.”

In such a scenario, market regulators, he said, could not have knee-jerk reactions to the developments in markets and would have to make rules and principle-based regulations to avoid any systemic risks.

India and other Asian countries have been going through sharp volatility in their markets of late. While the benchmark Sensex had lost close to 1,400 points in the past six sessions till yesterday, it was up by 327 points on Friday.

Mr. Damodaran noted that had the Asian markets been more integrated with global markets, the impact of happenings elsewhere would have been more severe.

Some of the Asian markets, he said, were great playgrounds where insider information was disproportionately present and used. In this regard, Mr Damodaran called upon analysts to have an industry code for objective and fair assessment of stocks.

Asian markets, particularly India and China, he said, could not be gloating over the fact that their economies continued to grow at fast pace and must put in place risk management systems to see that markets function in orderly and sustainable manner.

“We cannot sit back on our weaknesses... We have to build on our strengths... We have to put in place practices that are better suited to our markets at present,” he said.

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