India August 2018
Good News from India
Der Südkoreanische Präsident Moon Jae-in begrüsst Premier Modi bei seinem Besuch in New Delhi Mitte Juli. Gemeinsam weihen sie eine neue Produktionsstätte von Samsung ein, die zehn Millionen Smartphones pro Monat produzieren wird.
MANISH SWARUP AP KEYSTONE
Gute Nachrichten aus Indien: Im Weltbank Ranking der grössten Volkswirtschaften überholt Indien Frankreich und liegt neu auf Platz 6. Und auch die indischen KMUs machen im Juli wieder Boden gut. Chrys Kamber, Head Indian Investments, analysiert in ihren Insights die Faktoren, die dazu beigetragen haben und warum der Padma India Fund den Benchmark wiederum geschlagen hat.
India has overtaken France to become the world’s sixth largest economy, according to the latest data published by World Bank. India is now a $2.6 trillion economy and will become the fourth-largest economy by 2022, according to the forecast of the International Monetary Fund.
in Mio. US$
Weltbank 1. Juli 2018
Trade war risks and rising treasury yields have clouded the enthusiasm of global investors with regard to the emerging markets. In general, global emerging markets have underperformed and endured an exodus of foreign capital of roughly over USD 8 billion in the first have of 2018. Although the Indian economy is relatively isolated to the escalation of trade war rhetoric due to its sound domestic market and vibrant middle class, it was not immune to the foreign outflows. Year-to-date, foreign investors remained net sellers of USD 3.7 bn worth of Indian equities and USD 7 bn Indian debt, while domestic flows remained significant in the amount of USD 9.6 bn during the same period.
Indian equity market is getting polarized
After the reintroduction of long term capital appreciation tax, the reclassification guidelines of the holdings according the to the market cap strategies, weak global cues combined with higher crude oil price, triggered a risk aversion sentiment among the domestic investors. As a safety measure, they reduced their small and mid-cap exposure massively as both these segments have provided great returns over the last three years, and instead, have increased exposure in the large cap holdings. Hence, the Indian equity market is getting extremely polarized between the small/mid cap segment and the large cap, while the Nifty Index has reached all-time highs, driven by pockets of companies while the small/mid cap indices are still in the negative zone. The small and mid-caps have shed their high valuation in contrast to the large caps space which is getting crowded. Hence, this polarization should narrow and return to the mean sooner than later.
Padma slightly outperforming benchmark
In July, the opposition party led by the Congress challenged Mr. Modi’s administration by initiating a no-confidence vote. However the BJP sailed through and won 325 seats against 126 to the opposition in the lower house parliament consisting of 543 seats. The victory of the BJP in conjunction with the good start of the Q1FY19 earnings season, with high number of companies posting stellar earnings growth set the stage to cheer the market. Padma generated a return of 4.2% in July, slightly outperforming the S&P BSE Small Cap Index (USD) which returned 3.5%. The Nifty Index and MSCI India Index continued their outperformance in July and posted a return of 6% and 6.4% respectively in USD terms. The financials and energy sectors were the main positive contributors and the telecom sector was the only negative contributor to the fund performance this month. At the holdings level Sterlite Technologies and Bajaj Finance were the main positive contributors while Avanti Feeds remained the laggard. Avanti Feeds is the market leader in shrimp feed. It has a panel of strong brands, well established distribution, numerous manufacturing units and a strategic tie-up with global seafood company, Thai Union. The stock lost its steam due to the price increase in raw material, where margins were impacted in the short term. However, given the positive outlook for the shrimp feed in both global and domestic market, the fund remain invested in this company.