Excel Funds Management Inc.

Excel Funds Management Inc.

September 23, 2008 11:36 ET

Emerging Market Policies Supportive of Equity Prices and Growth

TORONTO, ONTARIO--(Marketwire - Sept. 23, 2008) - Excel Funds is pleased to report that the economies of the emerging markets in which its funds are invested are showing tremendous resilience in light of the recent near collapse in the US financial sector.

The economies of China and India are coming off growth rates that policy makers in the developed world would be highly envious of. China's economy expanded at a 10.1% annualized rate in the second quarter of 2008 and India's economy advanced at an 8.9% annualized rate.

Inflation Coming Down

"We are seeing real improvements in the fight against inflation" says Levi Folk, emerging market Economist at Excel Funds. "In contrast to the developed world," says Folk "these economies have been tackling inflation due to too strong growth." China is seeing marked improvements in its fight against inflation this year, and we have seen the fruits of its tightening bias paying off. China's rate of inflation has declined substantially from a peak of 8.7% in February to 4.9% in August.

Market Friendly Policies

A series of market friendly policy initiatives are being enacted in China to ensure stable economic growth and to restore confidence to equity investors. Most recently, the People's Bank of China cut interest rates shifting its focus from controlling inflation to stimulating growth and allowed banks to reduce the level of reserves they hold with the central bank. It has also cut the Stamp Duty, a tax on stock purchases, and plans to buy shares in the three biggest state-owned banks.

China Investment Corp. is the nations US$200 billon sovereign wealth fund, a government funded institution that is charged with investing in global capital markets. "Authorities are clearly directing funds to support China's financial sector, the stock market and the economy in general," says Folk who points out that the country has almost US$2 trillion in reserves and a budget surplus that allows officials significant latitude to stimulate the economy in the near term.

In India, authorities are taking measures to counteract capital outflows and a weakening currency. Foreign exchange reserves, approximately US$300 billion in total are being used to support the rupee exchange rate in the near term. The government is also infusing liquidity into the banking system to ensure that bank borrowing rates do not remain overly restrictive.

Finally, in Russia, a country that was most severely affected by capital flight, a massive federally directed stimulus package is being administered to shore up capital markets. President Dmitry Medvedev pledged US$20 billion to support the country's stock market alongside a variety of measures announced by the finance ministry to boost liquidity in the banking system including a cut in oil export duties. Markets responded very favorably and rallied 28% in a single session last Friday.

Countries are Well-Financed

These countries are coming off quarters of strong growth and all are well positioned to direct funds toward market stabilizing policies. The combined foreign exchange reserves of these three nations are nearly US$3 trillion.

The Near-Term and the Long-Term

Excel Funds continues to follow the long-term growth opportunities in emerging markets. While near-term volatility has created a very challenging environment for equity investors the world over, Excel Funds continues to firmly believe that the long-term emerging market fundamentals are intact and trump any near-term issues associated with the credit crisis enveloping developed economies. Emerging markets are fundamentally strong and stable. Their economies continue to grow and expand, due to high levels of local consumption. Given the drop in their price over the past few months, these economies are more attractive than ever. "Over the next few years, we expect emerging markets to outperform the developed markets", says Bhim D. Asdhir, President and CEO of Excel Funds Management Inc., the authority in emerging market mutual funds. "In fact," he states, "if there is ever a good time to invest in these markets, that time would be now".

About Excel Funds

Founded in 1998, Excel Funds is a specialized fund management company that focuses on investment opportunities in emerging markets. Excel Funds manages highly ranked and award winning mutual funds including Excel India Fund, Excel China Fund, Excel Chindia Fund, Excel Income and Growth Fund, Excel Emerging Europe Fund, Excel Money Market Fund and Excel India Trust (EXI.UN), a TSX-listed closed-end fund.

For further information about these mutual funds please contact Excel Funds at 1-888-813-9813 or contact your investment adviser.

Contact Information

  • Excel Funds Management Inc.
    Jessica McInnis
    Marketing Manager
    Website: www.excelfunds.com