Guest Post: By India Avenue Investment Management
1. India’s Equity Market Is Bigger Than You Think India’s stock market is larger than Australia’s by market capitalisation and has over 6000 companies listed on its exchanges, making it the largest in the world by listings.
2. Unhedged Exposure To The Rupee Provides No Added RiskThe Rupee bene ts from falls in commodity prices which provides diversi cation bene ts for Australian investors on an unhedged basis.
3. Corporate Governance On Its Way To Best PracticeIndia’s corporate governance practices are in a constant state of improvement. Rules and regulations to improve governance have been put in place and companies with strong governance are being rewarded with a higher multiple.
4. Strong GDP Growth Has Translated Into Earnings Growth And Equity ReturnsIndia’s equity market returns have been strong yielding 16% p.a. in local currency terms. This is a re ection of strong double-digit corporate earnings growth, resulting from GDP growth averaging 7% over the period.
5. India Has Streamlined Its Foreign Investor Account Opening ProcessOpening accounts in India has become a much less time consuming process with a mandate provided on execution. The focus by the Government of India is on improving the path of ight of capital to India.
6. Is Company Reporting In Line With Best PracticeAdoption of global standards for accounting and reporting practices has placed India on the map when it comes to disclosure and transparency. Companies report earnings quarterly.
7. Corruption in India: Perception or RealityWhilst India’s economy and business practices are perceived as being impacted by corruption, its global Corruption Index ranking has improved signi cantly more recently. The Government’s awareness of reducing the means of corruption is likely to provide signi cant improvement in GDP, productivity and ef ciency across corporates going forward.
8. Stock Market Infrastructure, Systems And Technology Are AdvancedIndia’s stock market trades on a T+2 basis and it uses an electronic clearing house. The markets are liquid and well traded. There are no capital restrictions.
9. Indian Asset Managers Moving Up The Quality SpectrumIndian managers have been largely institutionalised over the last 10 years. Minority interests from global asset managers and a culture of producing strong and sustainable alpha has illustrated the quality of local managers operating in their ecosystem.
10. India’s Regulator SEBI Is Highly CredibleSEBI is rated highly by rating agency IOSCO as a national regulator. Over the last 5 years there have been no major scams or fraud reported.
The document has been issued for information purposes. The views and opinions contained in it are those of India Avenue Investment Management Australia Pty. Ltd. (IAIM) ABN 38 604 095 954 & AFSL 478233. No part of this material may be copied, duplicated or redistributed without prior written permission of IAIM. The user will be held liable for any unauthorised reproduction or circulation of this document, which may give rise to legal proceedings. All the information contained in it is provided for information only and should in no way be taken as investment advice. Past performance is not indicative of future returns. Information contained here is based on our assumptions and can be changed without prior notice. It is not, and may not be relied upon in any manner as legal, tax or investment advice or a recommendation or opinion in relation to an IAIM financial product or service, or any other financial product or service. This document has been prepared without taking into account the investment objectives, financial situation or particular needs of any person. Please consult your advisors, read the relevant offer document and consider whether the relevant financial product or service is appropriate for you before making any investment decision. Investment in securities involves risks and there is no assurance of returns or preservation of capital. Neither IAIM, nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost capital, lost revenue or lost pro ts that may arise from or in connection with the use of this information.
