Author: Aaron Chaze

DOMESTIC CONCERNS PUSH INDIAN COMPANIES TO INVEST OVERSEAS

By Aaron Chaze

Overseas direct investment by Indian companies rose to $1.95 billion in August from $1.24 billion the previous month.

300 Regulars_07 EM Roundup_02

Sugar futures dropping on late monsoon season

According to the Reserve Bank of India, Indian companies executed 424 M&A deals during August. The largest investment came from Reliance Industries—which invested $302 million in the United Arab Emirates. According to a report by consulting firm Grant Thornton, economic and policy uncertainties in India are pushing companies to increase outbound investment. Between January and June 2012, Indian companies invested $2.1 billion internationally, with nearly half that in Europe and around 40% in North America.

The late buildup of the monsoon season in India—toward the end of August—has pushed down the price of sugar globally. Prices for sugar futures dropped by 20% from the end of July to early September. Prices had increased 24% between June and July after India's lower-than-usual summer rainfall and drought in key producing states affected harvest estimates in the world's second-largest producer. But production is still expected to fall to between 23 and 24 million tons, from 26 MT, in the 2012–2013 sugar harvesting season, which begins October 1. This will likely push India to import sugar in the 2013–2014 season to bolster stocks and will probably drive global prices higher.