Tag Archives: India

The most under-owned Asset Class

Pretty much every serious investor has a favourite investment thesis or theme that they employ.  Many of these are mainstream, which, by, definition, means that a number of people do something similar.  One such theme is to invest disproportionately in either dividend paying stocks or stocks that have a history of raising dividends.  Some people like to invest in the so-called FAANG stocks.  Some people like to speculate and call it ‘investing’ by putting large percentages of their assets into new ideas like cannabis stocks.  The point is that there are different strokes for different folks and that virtually everyone can justify their own peculiarities.  People seldom resist their own ideas.

I’m like most people.  For a generation now, I have been pounding my fist on the table about the need to address what I see as a chronic under-investment in emerging market equities.  To me, this asset class makes sense from virtually every meaningful perspective: historical risk, expected return, co-variance, current valuation, prognosis for growth… you name it.

In a world where overall GDP growth is anemic and not likely to improve materially in our lifetimes, emerging economies are the only ones where economic (specifically, GDP) growth remains strong.  These are rapidly industrializing countries which are mostly stable politically, young and full of ambitious strivers who want access to a more western way of life.  Many people are of the viewpoint that the key to a growing economy is a growing middle class. There are far more people entering middle class status in emerging economies than anywhere else. Continue Reading…

Indian economy poised for sustainable growth: Excel Funds’ Atul Penkar

Atul Penkar at Excel Funds Indian Road Show

(Sponsor Content)

The Indian economy is firing on all cylinders, fueled by policy reforms that are the catalysts for growth in one of the world’s fastest growing economies.

This was the central theme of the message delivered by Atul Penkar, lead sub-advisor of the Excel India Fund at an investor conference held in Toronto on September 19th. Mr Penkar is also the Head of Offshore Equities at Birla Sun Life Asset Management Company Ltd. (BSLAMC) in India.

Titled “Expert Insights into India: The World’s Growth Giant,” the conference was sponsored by Excel Funds Management Inc., in association with BSLAMC, the on-the ground sub-adviser of Excel’s three India-focused funds: Excel India Fund, Excel India Balanced Fund and Excel New Leaders Fund.

Mr. Penkar noted that India’s GDP growth has exceeded long-term projections made by Goldman Sachs and that the country was already close to achieving 2020 growth forecasts five years earlier.[1]

Huge Demographic Dividend 

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How Modi is accelerating India’s growth

India Prime Minister Shri Narendra Modi chairing the ICT-based, multi-modal platform for Pro-Active Governance and Timely Implementation, in New Delhi on July 12, 2017.

By Caroline Grimont

(Sponsor Content)

The Narendra Modi government has made enormous strides in transforming project execution in India, enhancing the momentum of country’s growth.

Modi’s success is largely premised on his principle of “Minimum Government, Maximum Governance,” which has been the Prime Minister’s mantra for transforming project execution in India.[i]

Shortly after assuming power, Modi announced that India’s government systems suffered from two weaknesses: “They are complex. And they are slow.” He noted that this had to be changed and that government systems must be sharp, effective, fast and flexible.[ii]

Government has no business being in business

To do this, India needed a policy-driven state, with simplified processes in which the government needed to focus upon the things that are required of the state, which must in turn deliver on the things it sets out to do. He emphasized that government “has no business to be in business” and must instead focus on policy formulation and execution.” [iii]

Modi also noted that in 20 years of liberalization the government has not changed “its command-and-control mindset,”[iv] which is exactly what he set out to do in transforming project execution in India.

An earlier McKinsey report identified what Modi referred to. It stated: “Inefficiencies in implementing infrastructure projects in India occur at all stages. This includes awarding projects as per plan targets, securing financial closure, and executing projects within cost and time.”[v]

Cutting through red tape

In accelerating project execution Modi has personally taken on India’s notorious red tape to clear tens of billions of dollars in stalled public projects, hoping that his hands-on intervention can bend a vast, dysfunctional bureaucracy.

He has focused on improving governance and introducing changes to legislations, rules and procedures wherever necessary to make processes more efficient; and cut down on multiple clearances those choke investment.

To keep track of project execution Modi holds a meeting with top state and central bureaucrats once a month, to check why projects have not got off the ground: leading to the revival of tens of billion dollars in value of central government and state projects in a wide range of areas.[vi]

Central and state bureaucrats are linked by video to Modi’s office for the meeting, usually held on the fourth Wednesday of each month. They are typically from the finance, law, land, environment, transport and energy ministries whose clearances are needed for many projects. [vii]

The agenda is set the previous week and usually has about a dozen stalled projects, public grievances and other governance issues.

By empowering government officials to execute on project implementation and managing the process on a monthly basis, Modi has effectively been able to remove the policy paralysis that has plagued India for decades.

“Modi has won plaudits for the initiative that has chipped away at a $150 billion backlog of planned roads, ports, railways, power stations and other projects.”[viii]

He has also taken major steps to eliminate corruption and transparency that have in the past paralyzed project execution. Continue Reading…

India’s ambitious renewable energy plans

By Caroline Grimont

(Sponsor Content)

Greater access to electricity — one of the pillars of Prime Minister Narendra Modi’s reform program –is powering increased economic activity, enhanced efficiency and improved productivity in India.

Modi has pledged to achieve universal electrification in India by the end of 2022; and to make increasingly greater use of solar power. In fact, India hopes to derive at least 40% of its energy needs from renewable sources by 2030.[i]

Although India is the 6th largest country in the world in terms of power consumption,[ii] almost 300 million of its people, particularly in rural areas, did not have access to 24×7 power supply prior to Modi assuming office. As of June 30, 2017, 14,834 census villages out of 18, 452 have been electrified.[iii]

Even as it expands the production of coal-generated electricity, India has started ramping up its solar capacity and hopes to generate 100 Giga Watts of solar energy by 2022, which will make it one of the largest users of solar power in the world. This will help to bring sustainable, clean, climate-friendly electricity to millions of India’s people.

“The world must turn to (the) sun to power our future,” Modi is reported to tell the 2015 COP21 climate conference in Paris. “As the developing world lifts billions of people towards prosperity, our hope for a sustainable planet rests on a bold, global initiative.”

And to support India’s solar power ambitions, the World Bank has approved a $625 million loan that will support the Government of India’s Grid Connected Rooftop Solar program by financing the installation of solar panels on rooftops across India. The project draws funds together from the Bank, as well as from the Clean Technology Fund of the Climate Investment Funds (CIF), and will mobilize additional funding from public and private investors.[iv] Continue Reading…

Confident domestic investors fuel Indian markets

 By Dwarka Lakhan (Sponsored Content)

In a display of overwhelming confidence in India’s booming stock markets, domestic investors have for the first time ever invested more money than foreign institutional investors (FII) in Indian equities.

The surge in investments is being led by mutual funds and insurance companies, which over the 1-year period ending May 26, 2017 pumped Rs 71,665 crore (US$ 11.1 billion) into the market, compared to foreign institutional investor (FII) net purchases of Rs 60,000 crore (US$ 9.3 billion.)[i]

Mutual fund inflows into the market have been primarily channelled through systematic investment plans that have become increasingly popular in the lower interest rate environment, following the demonetization of large currency notes.

“Demonetisation pushed interest rates down and a large section of investors became wary of investing in gold and real estate. That increased the flow towards mutual funds,” says Susmit Patodia, Associate Director & Head, Institutional Sales with Motilal Oswal Institutional Equities.[ii]

Domestic Indian investors see more value in local equities

Traditionally, Indian investors have been more risk averse but their shift to equities over the past year is an emerging sign of market maturity and the recognition that they could derive greater value from investing in domestic equities. Continue Reading…