Indian stock market offers diversification opportunity for Chinese investors

By Liu Weilin Source:Global Times Published: 2018/5/13 21:28:39

Illustration: Luo Xuan/GT


ICBC Credit Suisse Asset Management Co has announced the public offering of the ICBC Credit Suisse India Market Fund, China's first publicly offered fund for investing in India.

As the most important emerging market overseas, the Indian stock market's long-term trend must be positive. For Chinese investors, the current moment offers the best opportunity to get started in Indian stocks.

The certainty of India's growth is very clear. But considering the continuous acceleration of urbanization and the expansion of the middle class, India's future value will be large.

If estimated by purchasing power parity, India's GDP is already close to 7 percent of the world. The situation is similar to China when it started to rise a decade ago.

Now, investing in the Indian market means an investor can enjoy double-digit economic growth.

The Indian stock market underwent a correction in the first quarter, which means it offers a good opportunity for opening positions.

The investment of the ICBC Credit Suisse India Market Fund is actually a national concept. The fund will invest in exchange-traded funds listed on more than 20 exchanges in Europe and the US that are based on the Indian market.

It will invest in the future of the Indian economy and track the distribution of the industrial structure across the Indian market.

Specifically, in terms of the major industries weighted distribution of the index, the financial industry will account for the highest proportion, followed by information technology, alternative consumption, energy, essential consumption, raw materials, medicine, healthcare and other industries.

For large investors, adding a low-relevant asset to the allocation tool can effectively improve the effective frontier of the investor's asset allocation, and help the investor to better spread risks and obtain a more stable income.

Through our research, we found that at the same risk level, after joining the Indian market, the expected return of the portfolio can be increased.

In terms of small and medium-sized investors, the threshold for global asset allocation and overseas investment markets is high, which makes it difficult for them to set foot in this field.

Under the current institutional framework, this is a rare opportunity to invest overseas.

Recent research indicates that the Indian market has gradually become one of the best-performing markets in the world due to ongoing reforms, macroeconomic improvement and enhanced profitability.

According to the latest data from EPFR Global, there has been continuous inflow of funds into the Indian market.

Take March as an example. Due to trade friction between China and the US, foreign capital showed mostly net outflows from other Asian stock markets.

However, India's capital inflows reached $2.1 billion, which was in sharp contrast to other markets in the region.

This shows that foreign investors recognize India's economic strength.

Meanwhile, India is not affected by the trade friction between China and the US, and it has become a safe haven for funds.

Chinese investors should pay close attention to the Indian stock market and seize new opportunities.

The author is a fund manager with ICBC Credit Suisse Asset Management Co.


blog comments powered by Disqus