Brexit has triggered intense volatility in the global markets. While developed markets have been roiled, the emerging markets are also feeling the heat. Speaking to Bloomberg TV India, Bombay Stock Exchange CEO Ashish Kumar Chauhan said foreign portfolio investors (FPIs) will be thinking of increasing their exposure to India, which is the only bright spot.

Do you see any Brexit impact on FPI flows?

The Brexit brings to the fore the weakness of the developed markets. We are part of the emerging markets in terms of investment portfolios. The volatility in the developed markets affects even emerging markets in some ways. But India has been a different story. And India has been literally the only shining star.

If you analyse, India has fallen the least amongst most emerging markets. And that shows how strong the India story has been in the minds of people. If India outperforms even in a falling market, this story will remain intact. And a lot of people who are currently not serious about India or investing less than what they should be investing here, will start investing in India. In fact, the MSCI decision not to include China last week has also positively impacted India’s investment prospects vis-à-vis the FPIs. I don’t think FPIs would be so worried about investing in India at this stage. In fact, they would be rather discussing and thinking about how to allocate more because this is one story which is not that tentative vis-à-vis Europe, which now looks very volatile.

Do you think there is an increasing risk of disintegration of EU in the longer run?

Now, probably this is the beginning of a situation where the EU might disintegrate. But it may be a 20-50-year-long process. Today, unemployment and low growth are creating these kind of imbalances and frustration among the people. And that’s why they (British people) voted against staying within EU. But in case growth recovers, probably they may all want to stay together because that’s how the balkanisation and regional disparities would disappear. We need to basically be aware that many such things can happen over 5-10 years. Volatility factors have to be considered while making investment decisions.

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