India's high domestic demand immune to US slowdown: Merrill Lynch's John Thain

08 May 2008

John Thain, chairman and CEO, Merrill Lynch, feels that mergers and acquisitions (M&A) in India will drive revenues for Merrill. He does not believe in the decoupling theory though he says India is less coupled with US companies for domestic demand. India's high domestic demand would be immune to a US slowdown, he says CNBC-TV18 shares with domain-b its exclusive interview with Thain:

John Thain, chairman and CEO, Merrill Lynch, feels that mergers and acquisitions (M&A) in India will drive revenues for Merrill. He does not believe in the decoupling theory and says India's high domestic demand would be immune to US slowdown, Thain said as India was less coupled with US companies for domestic demand. He also finds China continues to be attractive for investments.

Thain agrees that the markets are off from their record highs as slowdown in US economy is factored in. On a more positive note for lenders, notes that US banks and investment banks would see lower deliquencies than before, though he does expect credit cards and loans in the US to see defaults as most job cuts are in US.

He also disclosed the Merrill's net collateralised debt obligation positions are $6 billion. Thain says Merrill Lynch would be looking at real estate mutual funds in the future In India.

CNBC-TV18 shares with domain-b its exclusive interview with Thain:

Crude prices are at $122 per barrel. Do you still think that you can hold those optimistic growth estimates that you spoke about in India and the rest of Asia? Goldman Sachs has put out a report that oil may go to $150 per barrel or even $200 per barrel. 
There is no question that high energy prices as well as high food prices are a problem for all of the world and not only in the US. High energy and food prices are negatively impacting the US consumer. So, I don't think we can ignore them. On the other hand, the Indian economy continues to grow and there are great opportunities here in India. The most recent statistics were north of 8 per cent at the growth rate and that is great in today's world. 

You don't take that as a tad optimistic considering that many of them probably don't factor in a $150 per barrel? 
I don't know whether even $120 or $122 per barrel is a very high price and again it has a negative impact. On the other hand, when I look around the world where there are great growth opportunities, no place is better than India right now.