What are safe investments? For decades, the answer that the vast majority of global investors have given has remained the same: US government securities. Debashish Bose, fund manager for Indian equities at Oaks Asset Management, is convinced that this will change—albeit gradually. He shared his views in a recent interview with finews.ch.

Structural factors are responsible for this - and not Donalds Trump's election. «Until now, risk aversion has meant that US bonds have been bought and equities sold, partly because the dollar is the international reserve currency and the world's reserve currency,» argues Bose. But after the sanctions against Russia and the freezing of central bank reserves held abroad, all central banks are asking themselves whether they really want to continue holding a large proportion of their assets in dollars.

 Fiscal and Geopolitical Policy Are Taking Over

«We are moving from a world in which monetary policy has set the tone to one in which fiscal policy and geopolitical considerations dominate. Diversification and securing supply chains are becoming more important, while commodities are gaining in importance. Reserve assets will be increasingly invested in the real economy in the future,» expects Bose, also because he believes a phase of financial repression (negative real interest rates, i.e. a nominal interest rate that is lower than the inflation rate) is likely in view of the high level of debt in many industrialized countries.

The equity fund manager, who himself commutes between Mumbai and Delhi, is, of course, also using this as a means of promoting his home market. However, he is not at a loss for other arguments either. «India is on its way from a country with predominantly low incomes to a country with middle incomes,» he says.

«India is a world of its own»

Driven by the wealth effect, more and more Indians are investing in their own stock market, which already has a capitalization of around 6 trillion dollars. At the same time domestic pension funds and insurance companies are also becoming increasingly involved against this backdrop. Moreover the capital controls ensure that only little Indian money can flow abroad.

In addition, demand from abroad is also increasing. India's weighting in the relevant MSCI share indices was increased significantly in September, which is also supporting the market. «We don't actually need foreign countries - at least not at the moment,» flirts Bose, who describes India as «a world of its own».