Kevan V Watts, chairman of Merrill Lynch International Inc and senior vice-president of Merrill Lynch, feels the correlation between the growth in the US and in other parts of the world has lessened. Excerpts from an interview:

Is the concern over a US slowdown valid?

Many observers have been betting on a slowdown in the US economy. After a long period of growth, there is bound to be some slowdown. But the global economy is quite well placed to withstand a slower rate of growth in the US.

This does not mean it won't affect global growth. But the correlation between the growth in the US and in other parts of the world has lessened than what was the case 10 or 15 years ago.

But the most interesting thing about the market is that it does say something about the way the world has changed. Look at the fall in the Shanghai Stock Exchange.

Earlier, the world wouldn't notice even a prolonged weakness in the Shanghai market. Now, even a one-day fall in that market gets noticed and triggers a global reaction. That, I think, tells us a lot about the importance of big emerging markets of China and India.

Predicting how markets will react on Thursday is an impossible task. At one level, the adjustment is not unexpected and perhaps it is also not unwelcome. Markets cannot go up on and on. There needs to be some adjustment period in values.

Is the period of adjustments over?

It has been noticed for sometime that adjustment periods tend to be quite short now, as fundamentals remain strong.

How do you compare China and India?

We have never seen China and India as competing. We think we have the resources to grow our businesses in both markets simultaneously. In fact, we have had implicit prioritisation of India.

Because, we have been present in India for a long time through a successful joint venture with Hemendra Kothari. We have not yet been able to get a licence for a joint venture in China. Our strategy is to grow our business as fast as we can in both India and China.

How does the world see India Inc's ambition to acquire global companies much bigger than their size?

We like to see companies growing by acquiring companies globally because it provides us with more opportunities. From an Indian point of view, it is a marvellous development as it shows how competitive Indian companies have become.

But the stock markets have reacted negatively.

Stock markets are skeptical about acquisitions. So that is not an Indian phenomenon. Chief executives, when they make the decision on big acquisitions, don't always worry about stock price weakness. They worry about their shareholders and the management's ability to cope with the integration. There are many other things to worry about.

Do you see any problem in companies taking huge debt on their balance sheets to fund acquisitions?

You take more risks when you take more debt. The use of borrowing to acquire as well as to establish to the world that the price to credit is very low is an entirely private equity phenomenon. They carry risks but in the current global environment, it is hard to imagine a better business model.

All global investments are expanding fast in India. What is Merrill's strategy?

We are very well placed competitively and unlike others, we are not competing with our Indian partner. Hemendra (Kothari) is very much present (in the company).

The change in ownership (to 90 per cent) is to enable us to move faster in expanding and developing our business in India.