JPM AM overweights India first time in 12 months
JP Morgan Asset Management has moved overweight Indian equities for the first time in at least a year attracted by attractive valuations and the secular growth story.
The manager has made the changes to its regional equity portfolios reflecting its positive view on the subcontinent.
“Over the past 18 months earnings forecasts in India have been cut more decisively than either for the broader Asian or global emerging markets. As a regional manager, we see that Indian earnings projections have turned more realistic and are much closer to the bottom versus their Asian/EM peers,” it said.
“True, India has been the worst performing Asian market year-to-date…In our view, the Indian stock market has already priced in many of the negative factors.”
Factors which could improve investor sentiment towards India include the country’s strong domestically-driven economy which may provide greater insulation from any global slowdown compared to Asia’s export-led economies.
At over 9%, inflation remains a key issue for India, but JPMAM believes moderating commodity prices and a proactive tightening stance by the Reserve Bank of India could lead to some easing.
In terms of market sectors, the asset manager is exposed to India domestic consumption story.
“We continue to be structurally positive on Indian consumer spending. In particular, we are impressed by the resilience of the rural economy where income growth remains robust despite the uncertain global/external environment. Additionally, we favour telcos as their competitive landscape has improved,” it said.
In contrast, it maintains an underweight position to infrastructure-related stocks, which have among the worst performers as government corruption scandals impact order books.
This article first appeared on Professional Adviser Hong Kong.