Asialink Business has a wonderful Asian Market Update Series and a recent one focused on India.
One of the speakers was Mary Manning – Portfolio Manager at Ellerston Capital.
Dr Manning manages the Ellerston India Fund among other Asian investments.
She detailed why India is unique and not the next China. For example, the structures of the two economies are very different and beyond coal, exporting bulk commodities is not going to be the bedrock of Australia’s relationship with India.
India is also at a very different stage of economic development to China, with different consumer preferences, price points and distribution channels. These factors give rise to a completely different set of sectoral opportunities, that will most likely require capital investment on the ground – but one size does not fit all when it comes allocating capital in India.
Dr Manning cited several examples of successful investment in India by multi-national corporations that cut across geographies, sectors, time frames and business models, such as majority stakes in listed companies, through to unlisted joint ventures and distribution agreements. These companies include household names in Unilever, Suzuki, Prudential, Macquarie, Facebook, Alibaba, McDonalds, Walmart, and QBE.
Dr Manning said the higher returns on equity that could be achieved in India were a major reason why Australian companies should be considering investment opportunities there.
She said there was currently an investor scramble for ‘new economy’ assets in India in key areas such as healthcare and infrastructure and while good buying opportunities could present over the next six to 12 months for equity investors – with the Indian economy weakened by COVID-19 – a long-term view was needed.
