Most excited about cyclical recovery in India, have exposure to infra
Jonathan Schiessl , Ashburton
Nov 03, 2017 | Source: CNBC TV 18
India's ranking in World Bank's ease of doing business matrix has gone up from 130 to 100. Does that change your attitude to investing in India? From my small areas that I have been interacting with the country, it has always been a country with tremendous potential but there has always been that one of those conundrum is the access to that potential has always been quite difficult. So I think anything – clearly what this Prime Minister has been doing, this has been the big focus area there has been concrete evidence of changes in certain segments and absolutely, it is a sort of half pat on the back moment for India, it is an achievement.
Can you convince the fence sitters among foreign institutional investors (FIIs) to start investing in India? I am not sure if one piece of news like this will necessarily change the mind. I think it is another positive piece of news which just adds to the incremental positives that India has been showing over the last few years. So from a market perspective, it doesn’t make huge amount of difference quite frankly.
Stock markets have been notching up to higher high, is that worrying you? Clearly, I think there is a global issue with the rally. First of all, before we get to the India side, I think globally we are grappling with expensive valuations although equities per se but then of course if you start looking at bonds and everything else then there is a story for equity.
I think the interesting thing for us is following the announcements made a few days back about the bank recapitalisations. If as an investor you can be more confident but ultimately, India is finally addressing one area, which is delayed recovery then maybe a bit more cyclical exposure is required and the cyclical sectors are a bit cheaper. In the headline, India looks expensive but I think there are some interesting sectors out there.
Any other economy facing stocks that you are interested in? Non-bank financial companies (NBFC’s) - again there is a bit of a wobble with some of the non-bank financials who have done quite well over the last few years. A lot of them producing reasonably good results. So we are still happy with the names we have.
What would be the pecking order in terms of stocks or sectors? So the consumption side looks good but we are probably most excited about getting cyclical recovery. So we have had a exposure to road build for sometime, infrastructure, broad areas where we see that if this economy does start to gain some traction, some of these more cheaper, beaten down infrastructure plays could be quite interesting.