Christopher Wood gives some advice to foreign investors who missed out on investing in India when markets plunged ahead of an unprecedented rebound last year – a good time to buy Indian stocks again.
Amid uncertainties surrounding the effectiveness of a vaccine against new Covid-19 variants and the practical challenges of large-scale vaccinations in emerging markets, Wood, Jefferies’ head of wealth management, said India is in a better position to do so effectively as she makes vaccines. “Hence, this would be a good time to invest because when India is united it grows rapidly.”
Wood increased India’s share of the Asia-Pacific (excluding Japan) portfolio of relative returns by 2 percentage points to 14%, returning to the level it was at the end of last quarter according to its latest Greed & Fear report. He cited factors, including the likely peak in Mumbai, hopes for herd immunity, and the upcoming vaccine rollout for optimism that India will cope with the crisis with a six-month investment outlook.
He also referred to a failure to comply with national isolation, which he said would be counterproductive.
The Reserve Bank of India, as Wood said in BloombergQuint’s “Navigating Through Uncertainty” special series, is taking steps in the right direction. But he would like the central bank to look at core inflation, not just headline inflation.
He considers Indian government bonds “relatively attractive in a relative sense” and expects that inclusion in global indices will open up more capital inflows for India. “I have 20% weight in India’s 15-year (government bonds).”
The market veteran sees private banking and insurance as key sectors with long-term growth potential in India.
Wood said India’s real estate sector has experienced massive consolidation due to the Real Estate Regulatory Act and the Goods and Services Tax, which has never happened in any other economy in his life. Developers who have experienced this have long-term opportunities, he said. However, investing in this sector has a “slightly high beta”.
Watch the full interview here-