Investmentfonds - News

Investmentfonds.de 20.09.2004:
HSBC: Indischer Aktienmarkt seit Wahl wie erwartet im Plus

Köln, den 20.09.2004 (Investmentfonds.de) - Quelle: Sanjiv Duggal, Bombay/Mumbai,
Fonds-Adviser des HSBC Indian Equity (WKN 974873)

The Indian stock market has risen strongly following the collapse on 14 and
17 May 2004 due to the shock election result. The market has risen 22
percent and has come back to pre election result levels as expected.

Corporate profitability remained strong during April-June 2004 and should
continue to remain reasonably strong for the next couple of quarters.

1. Monsoons have been 12% below normal. Monsoons are termed "deficient" if
they are 8% below normal. We had downgraded GDP to 6.1% from 6.7% as
monsoons were below normal.

2. Interest rates have moved up. The 10-year government security yield has
increased from 5.30% in May 2004 to 6.10% currently. Lending rates have
increased by between 25 and 50 basis points on home loans. We believe that
the bias is towards hardening of interest rates. Inflation has risen
sharply although this should fall going forward.

3. The 8 July budget proposed that capital gains tax (CGT) rates be cut.
This should be implemented from 1 October 2004. Short term CGT rates have
cut from 30% to 10% and long term CGT rates have been cut from 10% to nil.
A significant portion of local and foreign investors have held of selling
since 8 July to take advantage of the lower or nil CGT rates.

The risk premium given to markets could rise as we approach the US
elections in November. Also, a $1bn IPO coming up in October should impact
stock market liquidity.

Our medium to long-term view continues to remain positive as has been
highlighted in our previous notes.