...as India leads vaccine hunt

UPDATE

UNIVERSITIES, big drug groups and governments worldwide are racing to find a vaccine for Covid19. Many of them are working with Indian manufacturers and production has already started. India makes 60 per cent of the world’s vaccines and around 45 per cent of all generic drugs sold in America.

The country is also a global specialist in IT services, responsible for many of the largest firms in the world that marry software producers with customers.

It can be easy to overlook such prowess, when India is battling with coronavirus, economic growth has stalled and stock market performance is poor. Although overall conditions are tough, however, certain firms continue to do well and Ashoka India Equity Investment Trust aims to find them.

Listed on the London market in June 2018, Ashoka was doing rather well, until the pandemic struck. Midas recommended the stock at launch, when the price was £1. The shares rose to £1.19 by February of this year. Today, they are 99p.

The recent fall is frustrating but Ashoka is doing substantially better than competitors, many of which have seen their stock price slump. This outperformance bodes well for the future – and investors should reap rewards over the long term. Managed by former Goldman Sachs star Prashant Khemka, Ashoka boasts an 11-strong team of analysts in India with decades of investment experience between them. The fund focuses on 45-50 investments and top ten holdings include several companies that have actually done well in recent months, such as food group Nestle India, drug maker Cipla and telecoms giant Bharti Airtel.

Around half the fund is invested in large companies but the rest is largely made up of small and midsized firms. These are often barely known outside India but Ashoka’s local expertise means they can find these potential jewels early on.

Many go on to become sizeable companies – Cipla, for instance, was a mid-sized business when Ashoka first invested in it. Now the group is valued at more than £5billion.

Looking ahead, Khemka and his team are confident that they can find similar winners, as the country recovers from coronavirus and economic growth rebounds.

Like Vietnam, India is expected to benefit from US disenchantment with China and companies’ desire to source goods from other lowcost manufacturers. The country’s young, highly skilled workforce should act as a further boost and Ashoka is well-placed to find businesses that will gain from these broader trends.