Bloomberg News

Citi, BofA Said to Host Chidambaram Roadshow

January 10, 2013

Indian Finance Minister Palaniappan Chidambaram

Indian Finance Minister Palaniappan Chidambaram plans to hold meetings in Singapore, Hong Kong, Frankfurt and London this month, people with knowledge of the matter said. Photographer: Tomohiro Ohsumi/Bloomberg

Indian Finance Minister Palaniappan Chidambaram is planning a tour of Asia and Europe aimed at wooing investors to the nation, as a record current-account deficit threatens growth, four people with knowledge of the matter said.

Chidambaram plans to hold meetings in Singapore, Hong Kong, Frankfurt and London this month, the people said, asking not to be identified before an announcement. The meetings have been arranged by banks including BNP Paribas SA (BNP), Citigroup Inc. (C:US), Bank of America Corp. (BAC:US) and Deutsche Bank AG (DBK), according to the people.

Prime Minister Manmohan Singh overhauled India’s economic policies in September to lure more foreign investment, steady the currency and lower the odds of a credit-rating downgrade to so-called junk status. Moderating investment and tumbling exports have sapped growth in Asia’s third largest economy.

“The priority seems to sustain the positive sentiment, which had taken a huge beating over the last one year,” said Arun Singh, an economist at Dun & Bradstreet Information Services India Pvt. in Mumbai. “India is faced with a worrisome situation with record high deficits and elevated inflation and it calls for corrective steps urgently.”

The trip comes about six months after government and central bank officials visited countries from the U.S. to Russia to attract foreign asset managers and high-net-worth investors. Chidambaram will meet with institutional investors as well as executives of companies, one of the people said.

He is scheduled to be in Hong Kong on Jan. 22 and Singapore a day later, three of the people said. Chidambaram will then meet investors in Frankfurt on Jan. 28 and in London on Jan. 29, one person said.

Shares Jump

James Griffiths, spokesman for Citigroup, Paul Scanlon of Bank of America, Christine Chan of BNP Paribas and India’s finance ministry declined to comment on Chidambaram’s tour. Michael West at Deutsche Bank didn’t respond to an e-mail.

The BSE India Sensitive Index (SENSEX), or Sensex jumped 26 percent in 2012, its biggest annual gain since 2009, as Singh opened the economy to more foreign investments in the past four months. The steps prompted offshore funds to invest a net $24.5 billion into domestic shares last year, the highest among 10 Asian markets tracked by Bloomberg.

The government is likely to miss its fiscal deficit target and India may lose its investment-grade status in the next 12 to 24 months, Andrew Colquhoun, Hong Kong-based head of Asia- Pacific sovereigns at Fitch Ratings, said Jan. 8.

Borrowing Costs

Gross domestic product will rise as little as 5.7 percent in the fiscal year through March, the weakest pace in a decade, according to the finance ministry. Reserve Bank of India Governor Duvvuri Subbarao has left borrowing costs at 8 percent since a 50 basis-point cut in April 2012, resisting Chidambaram’s calls for a further reduction to bolster growth.

Chidambaram, who has pledged to contain the fiscal deficit at 5.3 percent of GDP in 2012-2013, down from 5.8 percent last year, is due to present the budget next month.

The current-account shortfall swelled to $22.3 billion in the quarter ended Sept. 30, the widest in RBI data starting 1949. Price gains will limit Subbarao to a 25 basis-point rate cut on Jan. 29, when he reviews policy next, according to eight of 10 analysts surveyed by Bloomberg News.

To contact the reporter on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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