Is it right time to look at investing in international markets? Arun Kumar answers

economictimes.indiatimes.com:

Broadly, if I take a step back and start asking the question, why do we need to internationally diversify? The starting point is that different stock markets of different countries do well at certain times and do badly at certain times, says Arun Kumar, Head of Research, FundsIndia.com.A lot of volatility and uncertainty in the global markets but then do you think that is the right time to maybe look at these international markets and if yes, what and which economy, which country?Broadly, if I take a step back and start asking the question, why do we need to internationally diversify? The starting point is that different stock markets of different countries do well at certain times and do badly at certain times. And the good part is that they do not coincide with each other.

Now, just to take a recent example, the last one, two years, you would have seen the Chinese economy down by 50%. US was in a bear market of almost close to 25%, but US has recovered a little bit.

And then on the contrary, you find that Indian markets have, while they were stagnant for some point, today we are probably at all-time highs. So, you will always see this pattern that at different points in time, different stock markets of different countries are doing well.

So, the overall idea is that instead of putting all your money in a single stock market and hence like completely being dependent on the vagaries of that market, if you can diversify across one or say a few other global countries, then broadly you end up diversifying away some of the risk. Now, in terms of where does the risk come from, one, in terms of where is the particular stock market in the overall business cycle, the overall economic cycle, what are the valuations in that