BlackRock aims to go overweight on India

BlackRock is planning to go overweight on India, its top fund manager in Asia has said.

Andrew Swan, who manages Blackrock’s $3bn BGF Asian Dragon Fund from Hong Kong, told the Reuters Global Investment 2013 Outlook Summit that Indian politicians will push reforms and economic growth will tick up.

His announcement came on the day the country’s economic growth headed for its worst annual growth in a decade. He said India is “underinvested and over-consuming,” but that the Indian government is implementing a series of reforms aimed at rebalancing that situation.

Swan’s fund had invested 9.3% of its assets in India at the end of October, up from 5.9% at June-end, according to Lipper data.

India is one of Asia’s top-performing equity markets, with the NSEI benchmark up almost 27%. Yet valuations are 43% below their five-year peak, according to Thomson Reuters data.

Among the reforms are a goods and services tax, which could add up to 1%-1.5% to India’s GDP. Another potentially beneficial reform is a national investment board to fast-track pending investment projects.

“If they can push some of these reforms through you’re going to see signs of growth picking up again and that’s going to start looking attractive in what will continue to be a low-growth world,” Swan said.

Swan, who is overweight China, said he was wary of the current wave of interest in consumer stocks. He prefers cheap financial and infrastructure shares, as the best way to play the potential reforms in India which should be aimed at lifting investment and curbing consumption.

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