SHOWS: HONG KONG, CHINA (June 6, 2013) (REUTERS - ACCESS ALL)

BINAY CHANDGOTHIA, PORTFOLIO MANAGER, PRINCIPAL GLOBAL INVESTORS

1. REPORTER OFF CAMERA SAYING:

'The BRIC nations are facing growth headwinds. How do you see growth in these countries? And how do you see India being placed in terms of growth versus the BRICs?'

2. BINAY CHANDGOTHIA SAYING:

'That's a very good question; the BRIC nations have kind of come under the scanner in the last year or two. Growth rates have dropped quite significantly. India recorded a five percent GDP growth rate last quarter. Slightly below that Chinese growth - as we just said - has gone down a fair bit from the structural levels it was at five years back. Brazil, after hitting a very significant high in 2011, I think at 8 percent, has gone significantly down to about 2 percent. And same with Russia. Clearly there are now structural issues in the BRIC economies. And I think we are beginning to see some signs of these structural issues being addressed now. For example, the entire reform package in India over the last three or four months, the effort to reduce fiscal deficit, current account deficit, and not just pursue growth blindly. You've seen something similar in China as well. The new policymakers are not unduly worried about a headline GDP growth. Brazil also, they've increased interest rates; they're sacrificing growth for a more stable and more sustainable environment. So our sense is that it'll take time for these measures to flow through in the form of higher structural growth. But it seems to us that they are on a better track today than they were last year, when they were ignoring the structural challenges that the economies were facing.'

3. REPORTER OFF CAMERA SAYING:

'How are you reading the global commodity prices? And how do you see it impacting India and specific sectors like iron and steel, or the overall consumption sectors?'

4. BINAY CHANDGOTHIA SAYING:

'As I said earlier, we believed that the big bull run in commodities is probably over. To that extent, we are not so positive on global commodity prices. As far as India is concerned, India has a significant import content in commodities, which basically means that - especially in energy - you've got tons of imports on petroleum products as well as on coal now. So you've got global commodity prices kind of come off - it's going to be good for the economy, no doubt. It's going to ease off inflationary pressures, it's going to allow the central bank to cut rates, it's going to ease the current account and the fiscal account deficits as well. Having said that, India does have a fair share of cyclicals and it's kind of indices, you know? Some of those stocks could come under pressure. Having said that, companies which are suffering because there were very little processing margin because of very high mining prices, they're going to benefit at the margin because they will get some margins in processing - as in people who can work from raw ore to the finished product. So some of that's going to flow through in a positive manner as well.'