Despite the fact that the country’s stock market is over-held and underinvestment in infrastructure weighs on the economy, Nomura Asset Management can’t resist putting money in India. There are just too many companies, including private insurers and diagnostic firms that offer opportunities to chase India’s services boom.
Nomura’s assets in India have tripled in the last two years to reach US$3 billion.
In an interview with Bloomberg, Nomura’s head of Asian equities investment ex-Japan Vipul Mehta explained why India still offers worthwhile opportunities.
- Gauge of consumer appliance manufacturers surged 41% since Jan 1, three times S&P BSE Sensex growth
- There will remain a lot of sectors that do well, despite ones that will underperform
- Overall valuation not as important as looking at what an individual company delivers; super-normal returns are worth paying for
- Challenges remain: no capital expenditure; Nomura owns few industrials or capex-dependent IT or health-care stocks
- Main risk is Prime Minister Narendra Modi’s agenda, valuation and fund flow; investors must keep an eye out for warning signs