Indian stocks better long-term bet than China
Friday, 12 March 2010
SINGAPORE, Mar 11 (Bloomberg): India offers better long-term returns on stocks than China, given the outlook for economic growth and corporate earnings, according to Franklin Templeton Investments.
India's economy may sustain faster expansion from a smaller base as "favourable" demographics boost consumption, said Stephen Dover, who oversees $25 billion as managing director and international chief investment officer for Franklin Templeton Investments' Local Asset Management groups.
Price clearing and the exchange rate are "freer" in India, he said. "If we were to make one long-term bet, we would make it on India rather than China," he told reporters in Singapore. "India is, in my opinion, still quite underinvested. Looking at India, India has the opportunity for some of that growth that China has had and the difference is that investors can participate in that growth."
The Bombay Stock Exchange's (BSE) benchmark Sensitive Index has lost 2.2 per cent this year, after rallying 81 per cent in 2009, as the economy dodged the worst of the global recession.
The gauge narrowly beat the 80 per cent increase in China's Shanghai Composite Index to rank among the 10 best performers globally. Dover said 90 per cent of discussion at conferences is focused on China. "For investors really looking for opportunities, the footnote is on India," he said.
Earnings in India may grow 20 per cent over the next three years, according to estimates by Sukumar Rajah, chief investment officer at Franklin Templeton Asset Management India. The company counts Infosys Technologies, Nestle India and Bharti Airtel among its holdings in the country.
San Mateo, California-based Franklin Templeton oversaw $189.5 billion in non-US stocks, $66.3 billion in domestic equities and $187.6 billion in fixed-income funds as of December 31.
These include emerging-market funds managed by Mark Mobius, who correctly predicted on March 23 the start of a "bull-market" rally. The MSCI Emerging Markets Index rose a record 75 per cent in 2009.
India stocks may "outpace" other emerging markets as the country's economy strengthens, Mobius, Singapore-based chairman of Templeton Asset Management, said in a question and answer interview posted on the company's website on March 1.
Finance minister Pranab Mukherjee said in his February 26 budget speech that India had weathered the worst global economic crisis since the 1930s and that the South Asian nation's growth may reach 10 per cent in the "not-too-distant future".
Still, Franklin Templeton continues to find investment "opportunities" in China, particularly as consumer spending increases. The investment firm holds shares of China Yurun Food Group, Parkson Retail Group and Ctrip.com International, Rajah said.
Among other emerging markets, Franklin Templeton is also optimistic on the outlook for Brazilian equities, according to Frederico Sampaio, portfolio manager at Franklin Templeton Investimentos Brasil. The benchmark Bovespa index rallied 83% last year and has gained 1.4 per cent so far in 2010.
Commodity stocks may lead gains in Brazil this year with an expected pickup in the US economy, Sampaio said in an interview before the briefing today. Vale SA, the world's biggest iron-ore producer and his top holding, may benefit as prices for the commodity will probably rise after negotiations currently taking place with buyers, he said. Shares that benefit from the domestic outlook for Brazil's economy may be a better bet over the long term, Sampaio said.
India's economy may sustain faster expansion from a smaller base as "favourable" demographics boost consumption, said Stephen Dover, who oversees $25 billion as managing director and international chief investment officer for Franklin Templeton Investments' Local Asset Management groups.
Price clearing and the exchange rate are "freer" in India, he said. "If we were to make one long-term bet, we would make it on India rather than China," he told reporters in Singapore. "India is, in my opinion, still quite underinvested. Looking at India, India has the opportunity for some of that growth that China has had and the difference is that investors can participate in that growth."
The Bombay Stock Exchange's (BSE) benchmark Sensitive Index has lost 2.2 per cent this year, after rallying 81 per cent in 2009, as the economy dodged the worst of the global recession.
The gauge narrowly beat the 80 per cent increase in China's Shanghai Composite Index to rank among the 10 best performers globally. Dover said 90 per cent of discussion at conferences is focused on China. "For investors really looking for opportunities, the footnote is on India," he said.
Earnings in India may grow 20 per cent over the next three years, according to estimates by Sukumar Rajah, chief investment officer at Franklin Templeton Asset Management India. The company counts Infosys Technologies, Nestle India and Bharti Airtel among its holdings in the country.
San Mateo, California-based Franklin Templeton oversaw $189.5 billion in non-US stocks, $66.3 billion in domestic equities and $187.6 billion in fixed-income funds as of December 31.
These include emerging-market funds managed by Mark Mobius, who correctly predicted on March 23 the start of a "bull-market" rally. The MSCI Emerging Markets Index rose a record 75 per cent in 2009.
India stocks may "outpace" other emerging markets as the country's economy strengthens, Mobius, Singapore-based chairman of Templeton Asset Management, said in a question and answer interview posted on the company's website on March 1.
Finance minister Pranab Mukherjee said in his February 26 budget speech that India had weathered the worst global economic crisis since the 1930s and that the South Asian nation's growth may reach 10 per cent in the "not-too-distant future".
Still, Franklin Templeton continues to find investment "opportunities" in China, particularly as consumer spending increases. The investment firm holds shares of China Yurun Food Group, Parkson Retail Group and Ctrip.com International, Rajah said.
Among other emerging markets, Franklin Templeton is also optimistic on the outlook for Brazilian equities, according to Frederico Sampaio, portfolio manager at Franklin Templeton Investimentos Brasil. The benchmark Bovespa index rallied 83% last year and has gained 1.4 per cent so far in 2010.
Commodity stocks may lead gains in Brazil this year with an expected pickup in the US economy, Sampaio said in an interview before the briefing today. Vale SA, the world's biggest iron-ore producer and his top holding, may benefit as prices for the commodity will probably rise after negotiations currently taking place with buyers, he said. Shares that benefit from the domestic outlook for Brazil's economy may be a better bet over the long term, Sampaio said.