Jpmorgan Indian Investment Share Discussion Threads

[loganair] 10/8/2016 11:52

India shines amongst emerging economies by Simon Crinage:

It has been a torrid two years for emerging market investment as falling commodity prices and the prospect of higher interest rates in the US have helped cause an ebbing of the flood tide of money that once poured into what were seen as tomorrow’s giants. The lustre of China, Russia and Brazil has been dulled by global uncertainties and geo-political tensions.

We believe one exception stands out – India. As a commodity importer, it benefits from lower prices for natural resources and the programme of economic reforms is attracting favourable attention round the world.

According to the World Bank, growth this year will be more than double the average for emerging market and developing economies.

Emerging-market difficulties:

Perhaps it is a sign of how far the emerging market star has fallen that the International Monetary Fund (IMF) devoted an entire chapter to the difficulties of the emerging economies in its World Economic Outlook in April.

Noted the IMF: “A number of large emerging markets – including Brazil and Russia – are still mired in deep recessions. Others, including several oil-exporting countries, also face a difficult macroeconomic environment with sharply weaker terms of trade and tighter external financial conditions.”

It added: “The rebalancing process in China may be less smooth than assumed”, whilst at the same time it has cut its growth forecast for South Africa for this year and next.

Brazil, Russia, China and South Africa are four of the so-called BRICS countries, the fast-growing quintet that once seemed irresistible to western investors. The ‘I’ stands for India, one country that appears to be bucking the trend and becoming something of a standard bearer for those emerging and developing markets that are showing themselves resilient in the face of current challenges.

Drivers of growth:

The World Bank identified India, as an emerging market that was benefitting from “low energy prices and modest but ongoing growth in advanced economies”.

It added: “Thus far in 2016, economic activity – led by India – has remained robust, supported mainly by domestic demand… Domestic demand will continue to be the main driver of growth.”

This is likely to be welcomed by those who have argued that a major engine of the country’s expansion going forward will be satisfying the needs of India’s burgeoning middle class. In its World Economic Outlook in April, the IMF wrote of India: “Growth will continue to be driven by private consumption, which has benefited from lower energy prices and higher real incomes. With the revival of sentiment and pick-up in industrial activity, a recovery of private investment is expected to further strengthen growth.”Meeting the aspirations of this growing middle class is a key aspect of the economic policy of Prime Minister Narendra Modi and his colleagues. The manifesto on which his BJP party was elected in 2014 included a pledge to nurture middle class “talent and purchasing power”, acknowledging that: “Having moved out of poverty, their [middle class people’s] aspirations have increased. They want amenities and services of a certain standard.”

A growing appetite for consumer goods, linked to the Modi government’s commitment on infrastructure spending and economic reform, has focused the attractions of investment in India in a range of sectors, including food, fashion and civil engineering. Reforms, both proposed and enacted, are wide-ranging from administrative changes to streamline the process of starting a business to new bankruptcy laws, that create for the first time a national insolvency regime that should speed up the process of corporate restructuring.

30 key reforms:

Restrictions on foreign ownership in a range of industries, including construction projects, coal mining and retail e-commerce, are being removed. The Center for Strategic & International Studies (CSIS), the Washington-based think-tank, has listed 30 key reforms in Mr Modi’s in-tray when he took office. Seven have been completed, 12 are “in progress” and ten are incomplete.

Of this last category, the CSIS expects real difficulties with only six of them, ranging from attempts to introduce a nationwide sales tax to moves to allow foreign lawyers to practise in India.

As India starts to explore the full potential of a growing, young and well-educated workforce coupled with the sheer size of a nation of 1.3 billion people, the attraction for investors of this most resilient of emerging markets will move more sharply into focus.

India has a very distinct investment landscape. No investor would consider diving head-first into the eurozone, yet India’s population is 3.5 times that of the single-currency bloc. Experience and local knowledge are key to identifying the opportunities in this fascinating and potentially rewarding market.

A Key standout:

India has been the key standout among emerging markets, the “last BRICS standing” as others have encountered serious headwinds. A rising middle class, keen for consumer goods, allied to a reform-minded government and increased infrastructure spending provide investment opportunities that are best identified by those with long-standing expertise in this market.

[uapatel] 20/7/2016 13:04

Looking to purchase some of these. Any reasons why the large discount to the NAV. Not that I mind when trying to get in. Thanks

[badtime] 27/6/2016 12:38

Good performer recently

[diku] 08/6/2016 21:50

600p a good double top?...

[titus10] 19/4/2016 11:56

Excellent site - hadn't expected to find such solid input on an ADVFN blog. Many thanks, Loganair!

My personal investment and trading approach is mainly based on technical analysis (shock horror!) and I've been in JII as a core investment since autumn 2003, profit-taking and repurchasing when the signs and portents suggested, with profits in this stock handsomely exceeding my stake at this stage.

Looking at the chart today, the 5-leg run-up since mid-Feb looks good, even if a pause for breath might be on the cards, with momentum indicators weakening a bit and some historical resistance around this level.

Longer term, the potential is surely there, subject to politics and bureaucracy as we know and as is so well covered by the analyses in the posts above.

For me, it remains a Hold. A break of the 600p level this summer would be bullish; a failure in that area might warrant further profit-taking, imo.

[loganair] 17/1/2016 13:07

By Brian Caplen, editor of The Banker.

As we start 2016, the outlook is gloomy on many fronts – poor economic prospects in the eurozone, and continuing worries over China and outflows of capital from emerging markets in general. The one bright spot is India, whose economy is expected to grow at 7.5% this year, rising to 8% in 2017.

India has two big advantages in the current economic climate – as an oil importer it benefits from falls in this and other commodity prices (unlike fellow BRICs Brazil and Russia) and as a latecomer to globalisation it plays little or no part in Asia’s supply chains. Bilateral trade between India and China is only 3.6% of India’s exports.

The Banker made the governor of the Reserve Bank of India, Raghuram Rajan, our central banker of 2016 in recognition of his efforts to stabilise the rupee and tame inflation.

But if India wants to remain as 'the last BRIC standing' it cannot afford to rest on its laurels. The easy wins of commodity price falls and accommodative monetary policy are one offs and any future success will depend on its ability to carry out long overdue reforms.

In this respect, the picture is more mixed. Government reforms to the business environment and foreign direct investment rules have been implemented but pushing more far-reaching changes, such as a goods and services tax, through the upper house of the Indian parliament is proving more difficult.

In confirming its BBB rating with 'stable' outlook, Fitch notes that India’s debt-to-gross domestic product ratio of 67% is higher than the BBB median of 43%, and the expected fiscal deficit in 2016, at 6.7%, is well above the peer median of 2.8%.

So India has more work to do and limited room to manoeuvre. Up until now, the government has gained savings through lower oil subsidies and it has managed to spend this money wisely by raising capital expenditure rather than current spending. But economists are divided as to whether this will continue, given a pay commission recommendation that central government employees receive a 23.6% pay increase.

“[This] raises doubts about the feasibility of the medium-term consolidation path without any new revenue-generating measures,” says Fitch. But a HSBC report says the reform has the potential to “raise consumption in an orderly manner, reduce slack in the economy and incentivise investment over time”.

Still, India is expected to be a more attractive destination for capital flows than most given that the Institute of International Finance (IIF) reports that 2015 saw emerging market portfolio inflows of only $41bn. This was the worst year since the financial crisis, with inflows down 85% on the 2010 to 2014 average, according to the IIF.

[loganair] 26/12/2015 12:37

30th November 2015 - Portfolio analysis by JP Morgan:

The trust's net asset value performed in line with the benchmark, while the share price underperformed. Stock selection contributed positively, while sector allocation detracted. Not holding drug maker Dr. Reddy's Laboratories was the biggest positive contributor, as the stock collapsed following a warning from the US Food and Drug Administration over possible violations of manufacturing standards at three plants. Several of our consumer discretionary holdings also helped. On the back of an increase in domestic car sales in October and a government wage rise, auto stocks rallied and our overweights in Maruti Suzuki and Tata Motors added value. Our lack of exposure to Mahindra & Mahindra detracted the most as the company outperformed on overall utility vehicle sales touching two-year industry highs. The overweight in Sun Pharmaceutical also hurt returns as the stock fell on disappointing sales growth and general negative sentiment towards the sector brought on by the headline noise around Dr. Reddy's Laboratories.

[loganair] 01/12/2015 21:45

Mark Mobius, executive chairman, Templeton Emerging Markets Group, feels the Indian economy will continue to do better than China’s. In an interview with Sanjay Jog and Kalpana Pathak, he discusses the current economic situation. Edited excerpts.


How do you see India's growth versus China’s?

India is looking better with seven-eight per cent growth. Indian exports, especially software and information technology, are doing well. The growth rate is 20 per cent plus at $70-80 billion. Hard exports are doing well, especially automobile exports.

How do you see India's market performance?

Indian markets have done very well among the whole spectrum of emerging markets.

How do you react to the Reserve Bank’s decision not to raise rates?

Interest rates and inflation are other good news. If reforms are undertaken, inflation will be pushed lower.

Why do you not invest in the venture capital segment in India?

We have a private equity fund that focuses on two areas: pre-IPOs for companies that are ready to go to market and pipe deals for companies that are already listed. We are not into start-ups and venture capital. We know markets and how to get companies listed. We have a pretty good record there.

How can India improve the ease of doing business?

It has to tackle the bureaucratic barrier, registration, licences. I understand the Narendra Modi government is working on bringing in one-stop registration. Also, there has to be a dramatic improvement in infrastructure like roads and electricity.

What is your take on the Fed rate cut?

It will happen. I am sure there are big debates within the Fed that if inflation is not going up, why should rates climb. So, it could be at the end of the year, or maybe next year. But it will probably happen and emerging markets will generally be favourably impacted.

What is the biggest risk for the Indian economy?

The big risk is reforms not coming through. For instance, reforms in the power sector, tax reform and, of course, Modi being re-elected. So far business has not been too excited as tax reforms have not come through and the power sector has not been reformed, but these are things the government is working on. The government's survival depends on reforms. While taking away subsidies, Modi will have to give something back.

The Bharatiya Janata Party lost the Bihar elections and the question is can Modi bring electricity to the rural areas? Can he move payments through the new bank accounts so that corruption is down? If that can be done, then he could be safe in rural areas.

How do you see reforms in India?

The key is implementation. If that hits a roadblock then we are in trouble. We have seen foreign direct investment on the promise of Prime Minister Modi making those changes. India is going to do pretty well, however, it has a lot to do in terms of ease of doing business. China is a lot better.

[loganair] 19/11/2015 20:58

India to be $6 trillion economy, buy stocks to capture that growth:


NEW DELHI: Investment is all about patience, and to create wealth, investors need to endure some pain in the equity market.

A recovery in the economy marked by earnings revival and beginning of the investment cycle will be the biggest trigger for the domestic equity market, which has been rangebound over the past few months waiting for fresh triggers to move up.

While Asia's third largest economy is recovering slowly, analysts say it has the potential to touch double-digit growth in a few years. When that materialises, India's GDP would grow to $5 trillion-$6 trillion in 5 to 10 years from $2 trillion now.

An equity market discounts everything in advance. The recovery in the economy will start reflecting in prices soon and economy-driven sectors will outperform other sectors in the long run.

This kind of economic growth is bound to find a reflection in the stock market, and equities would be the right choice to capture that growth, say experts.

"The broad hypothesis is that equity market tends to have a correlation with GDP in a longer time horizon. We are roughly $2 trillion of GDP now, and if I assume that you can have 13 per cent kind of notional GDP growth rate over the next 10 years, then you could be somewhere between say $6 trillion and $8 trillion depending on what kind of growth you are assuming," says Madhusudan Kela, Chief Investment Strategist, Reliance Capital AMC.

"There is a gigantic opportunity if you take a time frame of 5-10 years. People should not feel left out. Over the next 10 years, there is going to be wealth creation to the extent of $5-$6 trillion. Some of it will happen in the private domain and some of it will happen in a public market domain," he said.

The equity market has been sluggish over the past one year, and the only two sectors that outperformed were consumer durables and heathcare or the pharma theme. Going forward, economy-related themes are likely to do better.

Analysts say realty and infrastructure stocks, which have been under pressure, may begin to look up soon, supported by the reform measures announced by the government. Earlier this week, the government relaxed foreign direct investment ( FDI) norms in the construction sector by removing two major conditions related to minimum builtup area as well as capital requirement.

Most realty firms are now raising cash by spinning off their non-core assets, which will strengthen their balance sheets, say experts.

While equity market sentiment has been weak in recent months, the market will reward patience. "Nothing moves in a straight line, especially in equity market. So investors should use every dip to accumulate quality stocks for long-term time horizon," they say.

"The market is likely to witness high volatility during the rest of this year and early part of 2016 due to slow earnings revival, a mismatch between expectations and delivery from the government and global factors like slowing China and the impending US Fed rate hike," said Amar Ambani, Head of Research, IIFL.

"But it would also present a golden opportunity to accumulate quality stocks. The year 2016 has a lot to offer, which could well lay the foundation for a big bull run," he added. Another key trigger for market would be a further fall in interest rates. Some analysts project interest rates to fall by 100 bps in calendar 2016.

Despite global headwinds, such as the uncertainty around US Fed rate hike and the overhang of China slowdown, analysts on Dalal Street are confident that India would be able to revive its GDP growth in the coming years and outperform other emerging market economies (EMs).

"We are passionate India bulls and we speak by heart. We genuinely believe that India is going to be a $4 trillion economy in the next seven to eight years and there is going to be big returns on stocks," Sunil Singhania, CIO- equity, Reliance Mutual Fund, said in an interview with ET Now two months back.

"India is doing relatively better than a number of other countries, and finally, it has reached a size which the world cannot ignore. That way India definitely stands out," he said.

Singhania said the macro story for India was the best among all large economies. "So, while everyone else is fighting deflation, we are still fighting inflation. Things can only improve from here," he said.

One of the most important factors that will keep the momentum going for the domestic equity market is participation of retail investors, which has picked up in 2015 via the mutual fund route. Experts advise investors to trust the power of compounding, which can multiply their wealth.

"The stock market requires discipline, time commitment and effort. Making money is not easy. So try to do investment either on your own, when you have the time commitment and energy, or come via the mutual fund route," said Nilesh Shah, MD, Kotak Mutual Fund.

"If you are coming via the mutual fund route, try to invest on a regular basis. Every month save something and invest something. That small amount you save over a period of time will end up becoming quite large," he added.

Shah advised investors not stop an SIP account even if the market corrects sharply. "In fact, those are the times when you should allocate a higher amount to SIP and let the India growth story take its own turn. Eventually, this long-term investment will help you create a lot of wealth," he said.

[loganair] 29/7/2015 17:54

India – investing in one of the world’s fastest growing economies - by James Saunders Watson:


India’s economy seems set fair for rapid growth. With a rate of expansion pulling ahead of China’s, the powerhouse of South Asia may on the brink of realising its potential as a global economic giant.

The governing Bharatiya Janata Party (BJP) has a mandate for tough reform and a pro-business agenda. The country boasts a young population, a growing middle class and an established business sector.

Small wonder then that the eyes of the investment world are sizing up the available opportunities.

A new government one year in:

May 2014 saw India, the world’s largest democracy, elect by a landslide the first majority government in 30 years. The victorious BJP promised tough economic reforms, a drive against corruption, better infrastructure, more efficiency in public administration and measures to meet the aspirations of India’s expanding new middle class1.

The BJP programme was seen as positive by many investors, especially with regard to energy and technology stocks2 and shares in financial services and industrial companies3. And beyond its specific programme for government, the BJP’s core message – that the time has come for India to take its rightful place on the world’s economic stage – seems to have inspired confidence.

“Even after nearly seven decades of our independence, the country has not been able to discover its innate vitality, the sense of time and the will to act,” declared the BJP manifesto. “Thus, we have wasted more than half of a century. Many other countries, even with smaller size and lesser resources, have surpassed us in development.”

One year into the BJP’s reforming administration, and its efforts are already winning praise.

The World Bank noted in April: “India’s government has begun to implement reforms to unlock the country’s investment potential – to improve the business environment; liberalise foreign direct investment (FDI); boost both public and private investment in infrastructure; quickly resolve corporate disputes; simplify taxation and lower corporate taxes.”

Growth rates:

India’s actual and forecast growth rates have strengthened. Actual growth rates reached 6.9 per cent in 2013 and 7.2 per cent last year and growth is forecast by the International Monetary Fund (IMF) to hit 7.5 per cent this year and next.

By contrast, the IMF sees India’s neighbour, and sometimes-rival, China heading in the opposite direction in terms of growth, from 7.8 per cent in 2013 to 7.4 per cent last year, forecast to drop to 6.8 per cent this year and 6.3 per cent next year.

Leading the Asian pack:

Nor is it only in comparison with China that India’s record shines. The IMF average growth figure for all emerging and developing Asian countries shows that 2013 was the last year in which this average outpaced India, by 7 per cent to 6.9 per cent. In 2014, India recorded 7.2 per cent expansion, against a 6.8 per cent average, and the fund is forecasting the average to fall to 6.8 per cent this year and 6.4 per cent next year, against India’s 7.5 per cent for both years.

The Harvard University Center for International Development predicts annual GDP growth in India to average 7.9 per cent over the next eight years.

In its April report, the World Bank said: “India’s government has announced an ambitious development agenda…if this agenda is successfully implemented, it carries great promise of an acceleration in economic growth that is also inclusive and sustainable.”

The Harvard University Center for International Development predicts annual GDP growth in India to average 7.9 per cent over the next eight years.

Economic health check:

Meanwhile, the IMF’s annual “Article IV” consultation – the once-a-year health check carried out on each of the fund’s 188 member-countries – declared: “India’s near-term growth outlook has improved and the balance of risks is now more favourable, helped by increased political certainty, several policy actions, improved business confidence, lower commodity import prices and reduced external vulnerabilities.R21;

It added: “The decisive outcome of the national elections has buoyed sentiment and boosted expectations of economic reforms…The new government has initiated economic reforms, including diesel-price deregulation and raising natural gas prices, taken steps towards more flexible labour markets, commenced reforms in the coal sector and is enhancing financial inclusion.”

India’s rise was noted also by the US Treasury in the most recent of its bi-annual reports to Congress on international economic and exchange-rate policies, on April 9. “Growth in China is expected to continue to slow and Russia is contracting sharply, with regional growth implications, while growth in India should continue to improve….India’s foreign exchange reserves reached an all-time high in March 2015 as the central bank purchased foreign currency to moderate the impact of large foreign investment inflows on the rupee.”

Economic programme:

The BJP’s economic programme is sweeping in its ambition, ranging across measures to promote entrepreneurship, to develop labour-intensive industries such as textiles and electronics assembly, to improve employment training for young people, to develop transport and housing and to build 100 new cities.

It is pledged also to get to grips with bottlenecks and poor public-service delivery: “We are known by a culture of missing links and lack of last-mile connectivity. We have water but no pipeline to carry it; we have schools but no teachers; we have computers and machines but no electricity; we have scientists but no labs.”

And it said: “A whole new class has emerged. Those who have risen from the category of poor and are yet to stabilise in the middle class, the ‘neo-middle class’. This class needs pro-active handholding. Having moved out of poverty, their aspirations have increased. They want amenities and services of a certain standard.”

Not all of the BJP’s reforms are de-regulatory or free-market orientated. Among the anti-inflationary measures in the manifesto are “strict measures and special courts to stop hoarding and black marketeering”.

Furthermore, the IMF warned that “much remains to be done”, particularly in terms of reforming the markets for labour and capital and reforming also product markets. This was echoed by the World Bank, which said: “The pace of reforms will need to be stepped up to bridge the yawning infrastructure gap, unlock private investments, make Indian firms globally competitive and strengthen the balance sheets of public sector banks.”

But in its World Economic Outlook in April, the IMF was upbeat: “India’s growth…will benefit from recent policy reforms, a consequent pickup in investment, and lower oil prices. Lower oil prices will raise real disposable incomes, particularly among poorer households, and help drive down inflation.”

Investment choice:

For investors who are comfortable with the risks inherent in emerging markets, India represents an alluring investment choice.

Please remember that investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems and may be illiquid.

The JPMorgan Indian Investment Trust plc focuses purely on Indian companies, providing access to India’s long-term growth potential through locally based investment expertise. The trust is:

The first and largest UK investment trust to focus purely on India.

Managed by a dedicated team within a 75-strong pacific regional group.

Strongly focused on first-hand company visits and research to discover attractively-valued stocks.

An investment journey rich in possibilities:

India is in the early stages of a long journey to unlock its colossal economic potential.

This country of over 1.2 billion people has given its government a mandate to get to grips with the inefficiencies, corruption and poor services that have hobbled growth in the past.

For investors, this journey is one that is rich in possibilities.

[badtime] 22/7/2015 21:03

Wonder how Bins short is getting on

[hazl] 19/7/2015 11:48

koov expecting announcement any day.
Will it reflect India's growth?
Difficult to say at this point.
IMO

[badtime] 29/6/2015 08:48

Should hit new highs...605p plus....
Should close your shorts
400 points up....today..
Your post of June 22nd

[binladin] 29/6/2015 08:44

Shorting this to 400 p

[binladin] 23/6/2015 15:23

dump it...had enough