Indian tortoise much safer than Chinese hare.

Foreign Institutional Investors, FIIs, bought $207.92 million worth of Indian shares in July and $220.3 million worth in August, having sold $253 million worth till July. India has attracted the maximum from FIIs, followed by Thailand with $67.4 million and Malaysia with $5 million. They have sold $3 billion worth of Japanese stock and $10.5 billion worth in China. "India depends less on commodities and also has low external debt, as well as enough exporters to gain from rupee depreciation. So, it is a well balanced equity market," said S Sharma. India is much more steady, said Ruchir Sharma. "In emerging markets, the volatility in terms of economic growth, exchange rates tends to be much greater than India.This is a very steady-as-she-goes economy." In fact, Sharma is much more worried about the Chinese economy and the effect it will have on other emerging market countries than he is about Turkey. The crisis in Turkey is created by its president Recep Erdogan. "Of late his reckless economic policies -- including setting interest rates at artificially low levels, and driving up debt, deficits and inflation -- have only made matters worse." China does not import all its requirements like Turkey does, it does not have to borrow dollars to finance its imports and it does not suffer a trade deficit. What it has is enormous domestic debt and is susceptible to a flight of currency. China has not succeeded in making its currency, the renminbi, international. As the Federal Reserve in the US raises interest rates the dollar will strengthen. "Right now Chinese can earn earn the same interest rates in the United States for a lot less risk, so the motivation to flee is high, and will grow more intense as the Fed raises rates further." If China raises rates to attract FIIs its economy will slow down. Though Turkey has foreign debts of $467 billion it will not have as much effect on emerging market economies as a devaluation of the renminbi will have, agrees R Napier. "As we discovered in 1994, when China did its last major devaluation, that had punitive impacts on anybody competing with China. I believe that Chinese devaluation would be the worst among all these issues for the emerging markets." "But it seems to me that among all the emerging markets India, from an economic perspective, remains one of the most flexible." We export little compared to China, just $25.8 billion in July, after a 14.3% rise, but, apart from oil, our imports are not essential for living. The government increased customs duty on 400 imported items recently, so it is not worried about reaction from the people. A devaluation of the Chinese currency will be troublesome indeed. The hare seems to be in greater danger than the tortoise. Old story.