Global Investors Will Return to India As US Interest Rates and AI Boom Shift, Says Amundi CIO

Global money will inevitably flow back to emerging markets like India as US interest rates pause and strong domestic growth fundamentals take center stage, according to Vincent Mortier, group chief investment officer of Amundi. Amundi is Europe's largest portfolio management firm, holding €2.6 trillion in assets under management and investing in SBI Funds Management Ltd, India's largest asset management company.

Market Shifts

Long-term US interest rates have climbed due to heavy public borrowing and heavy corporate demand for artificial intelligence projects. This rise is already putting pressure on housing and rent markets, which will likely push the US central bank to pause further short-term rate hikes. At the same time, high investments in memory chips and data centers have driven US inflation, but new capacity creation will soon lower chip prices and bring deflationary pressures. These shifts will weaken the US dollar and help emerging economies.

India Outlook

Mortier expects India's robust economic fundamentals to attract foreign investors back, especially if oil prices drop due to a resolution of conflicts in West Asia and Ukraine. He notes that if countries were judged blindly on metrics like debt-to-GDP, budget deficit, current account, and currency reserves, India would look like a developed nation compared to the US. He also suggests that Indian IT software companies can succeed by embedding AI into their offerings, even though the tech revolution poses challenges for white-collar jobs globally.

Context

Global asset managers like Amundi allocate capital across international markets by tracking macroeconomic indicators, debt metrics, and currency movements. When borrowing costs in developed economies shift and growth moderates, institutional investors routinely rebalance portfolios toward emerging markets that offer stronger underlying economic expansion and better debt positions.