Indian summer sizzler
ASIA’S HOTTEST STOCK MARKET
EVERYBODY loves an Indian summer, especially investors. That is why many are targeting the Indian stock market, which is red hot right now.
Indian shares are up more than 25 per cent on the year to date, and more than 50 per cent measured over 12 months.
That makes it one of the best performers in the world, streaking ahead of China, which is down 12 per cent this year. India has even surged ahead of the super-charged US market, despite the fact that it grew 20 per cent in the year to August 31.
If tempted to add an Indian fund to your pension or stocks and shares Isa, check what exposure you already have.
The Indian economy is in good shape and has recovered from the Covid pandemic much faster than expected, says Jason Hollands, managing director at Tilney Investment Management Services.
It has also benefited from Premier Xi Jinping’s authoritarian crackdown on the Chinese private sector. “This has unnerved investors and many Asian and emerging market fund managers have swung behind India instead,” he explains.
Prime Minister Narendra Modi’s business-friendly government is focused on modernising the country by simplifying taxes and reducing bureaucracy. India is shooting up the
World Bank’s annual “ease of doing business” tables, from 142 when Modi came to power in 2014 to 63 today. Hollands says its public finances are in relatively good shape and it is now embarking on a $1.35trillion (£1tn) infrastructure programme.
India has been dependent on imported oil but is looking to be energyindependent by 2047, to mark the 100th anniversary of freedom from British rule.
Within six years it will have overtaken
China to become the world’s biggest country by population, and has an expanding middle class. Hollands says: “By the end of the decade, India is forecast to be the world’s third largest consumer market, after the US and China. It’s a great investment opportunity.”
He says more cautious investors could spread their risk by putting money into an Asian or emerging market fund, rather than one that specialises in India. “Aubrey Global Emerging Market Opportunities has a hefty 43 per cent exposure to India. It is up 14 per cent over one year and 118 per cent over five years.”
For those who want a pure-play India fund, Hollands tips the Ashoka India Equity Investment Trust, which is up 73 per cent over the last 12 months, or the Goldman Sachs India Equity Portfolio, up 50 per cent.
Darius Mcdermott, Chelsea Financial Services managing director, says India is one of his favourite emerging markets:
“Its demographics are good with a young, highly-educated population and the government is very pro-business.”
He rates Stewart Investors Indian Subcontinent Sustainability and Alquity Indian Subcontinent, which have both grown around 56 per cent in the last year.
Alquity fund manager Mike Sell says the economic outlook for India is positive, but cautions: “This presumes there is no Covid deterioration and reasonable rainfall during the rest of the monsoon season.” Emerging markets like India can be volatile and past performance is no guide to future returns.
Only invest a relatively small part of your savings, and for a minimum five years, preferably longer.