“Despite some recent transient weakness, we think India is very well positioned to continue its impressive growth,” wrote Gaurav Sinha, associate director of asset allocation at WisdomTree, in a blog. “Several recent measures to boost the economy point to a political willingness to support India’s growth.”
“Beyond domestic reasons, the tax cut was made to help incentivize global manufacturing companies to hedge against the effects of the volatile U.S.-China trade dispute,” he added, noting that many companies are looking to relocate from China. “We believe reforms and growth are going to be the story ahead.”
Sinha, whose firm runs EPI—the second largest India ETF—could be talking his book. But he’s not alone calling for India’s growth story to pick up.
J.P. Morgan’s Head of India Equity Research Bharat Iyer told Bloomberg that the country’s economic and corporate earnings growth “has bottomed out.”
“Emerging market investors are running a neutral position in India vis-a-vis the benchmark,” he told Bloomberg. “This neutral position has been despite earnings growth being underwhelming for the last four to five years.”
“This just shows how well they appreciate a structural opportunity,” he noted. “But for them to go overweight, we’ll have to offer a more robust earnings cycle. That should take time.”
India represents about 9-10% of broader emerging market ETFs such as IEMG and the Vanguard FTSE Emerging Markets ETF (VWO)—it’s the fourth largest country allocation in these portfolios.
Contact Cinthia Murphy at [email protected]