Analysts Are Bullish on India Despite Political Uncertainty
As Congress Party leaders and their allies decide which people and principles will shape economic policy under India's next government, some portfolio managers say investors should largely ignore the political turmoil and buy stock in the country's strongest companies whenever prices dip.
While there may be more stock-market shocks and surges as the new government grapples with its commitment to economic liberalization, these analysts say India's bullish long-term growth outlook will remain largely unchanged.
"Investors are doubting growth for countries all around Asia, but not India," says Ray Jovanovich, chief investment officer at Credit Agricole Asset Management in Hong Kong, which runs funds that have about $152 million invested in India. "The economy still has arguably the best growth prospects in the region."
"If you can get these...politicians to shut up, the market will recover," declares Vijayan Krishnamurthy, chief executive at JM Capital Management in Bombay. "It's going to be an extremely volatile market, but wait for opportunities and buy."
Indeed, the Indian stock market has been downright terrifying for investors in the wake of Congress's unexpected election victory last week and the ensuing political drama over who will become the country's next leader. After sliding 6% Friday, the Bombay Stock Exchange's 30-Share Sensitive Index plunged 11% Monday on concern that a Congress-led coalition government might slow or even reverse the market-opening policies that have helped India's economy flourish in recent years.
But despair quickly gave way to euphoria Tuesday amid optimism that free-market advocate and former finance minister Manmohan Singh -- and not Congress President Sonia Gandhi -- would become the next prime minister and keep policies on track. The index rose 8.3% Tuesday, then climbed a further 2.6% yesterday to close at 5006.10.
The Bombay market was one of the best performers in the world last year, climbing more than 70%. A record $7.5 billion in foreign funds flowed into Indian equity and debt markets in 2003 on optimism that economic overhauls and expanding consumer spending would continue to power the country's growth. Foreign investors have been net buyers of more than $3 billion in Indian stocks and bonds so far this year.
The basic Indian growth story hasn't changed with the election, contends Bharat Shah, chief executive of fund-management company ASK Raymond James Securities India Ltd. in Bombay. He still expects gross domestic product to expand by at least 6% in the year ending March 31, 2005.
"If your investment horizon is ranging into a few years, I think there are a large number of attractive buying opportunities that will give good, solid returns," Mr. Shah says, citing the software, pharmaceuticals and auto industries. "India's economic growth over the years to come will continue to be among the highest in the world."
Investors predict more market volatility, triggered by politics as India's new governing coalition chooses a cabinet, sets an economic agenda and unveils its first budget next month. But some say they will be buying when prices fall.
Among the stocks the bulls are watching are software companies, which have seen their prices plunge in the past week even though earnings prospects remain healthy. Companies such as Infosys Technologies, Wipro and Satyam Computers Services are expected to see their profits grow 20% to 40% this year thanks to widening global demand for their information-technology services.
"I was pretty sanguine on IT over the course of 2003," says Mr. Jovanovich. "After Monday, at these prices, the IT sector is looking interesting."
Indian software shares are trading around their historical average price/earnings ratios, at about 20 for the current fiscal year, analysts say. Infosys shares, which rose 94.80 rupees ($2.09), or 1.9%, to 4,981.55 rupees yesterday, have a projected P/E ratio of about 21. Wipro shares fell 1.3% to 1,523.20 rupees, giving them a P/E ratio of about 25. Satyam shares rose 1.4% to 312.40 rupees, with a P/E of around 14.
There may even be some upside among the market's biggest election losers. Partially state-owned oil-and-gas companies, including Bharat Petroleum and Hindustan Petroleum, have seen their stock prices slide more than 30% on concern that the government will scrap plans to sell part of its remaining stake in the companies. The market had looked forward to the sales, expecting the privatized companies would become more efficient and profitable.
Now, some analysts argue that the oil-and-gas stocks are inexpensive enough to buy, even if the new government cancels plans for divestment. All the partly privatized and listed state companies "have become excellent dividend yield stocks," says Mr. Krishnamurthy of JM Capital. "They were [trading] like they were winding up and going out of business tomorrow."
Bharat Petroleum shares rose 15.70 rupees, or 4.9%, to 337.85 rupees yesterday, leaving it with a dividend yield of 5%. Hindustan Petroleum shares rose 2.5% to 326.70 rupees, meaning a 6% dividend yield.
Banking shares also have become attractively inexpensive. Many of India's best banks are trading below book value, says Jon Thorn, managing director of the $110 million India Capital Fund in Hong Kong. He says that while the shares have been affected by concern a new government might delay liberalizing the financial industry, bank earnings will continue to rise as India's economy expands. "It may take even a bad government a long time to mess up GDP growth," he says.
To be sure, a bad monsoon during the next few months probably could hurt Indian growth prospects, and stocks won't be immune to current global trends of rising interest rates and diminishing interest in emerging markets. Still, the bulls say there's opportunity in the volatility. "Monday was a blind panic, Tuesday was blind buying," Mr. Thorn says. "Now, you have to be more selective."
印度政坛风云不会吓跑投资者
眼下印度国大党及其联盟正在酝酿新一届政府的经济政策及经济掌舵人，而一些投资经理认为，投资者不应受政治风云变幻所干扰，他们应该在股价回落时购入一些一流企业的股票。
新政府在兑现经济自由化的承诺时会遇到阻力，而印度股市可能会因此出现大起大落，但分析师们指出，印度良好的长期增长前景基本不会改变。
香港Credit Agricole Asset Management的首席投资长雷?乔瓦诺维奇(Ray Jovanovich)说，投资者对整个亚洲地区的经济前景心存疑虑，但印度的经济前景显然仍是该地区最好的。该公司旗下基金对印度的投资额约为1.52亿美元。
JM Capital Management驻孟买的首席执行长Vijayan Krishnamurthy说，如果你能让那些政客闭嘴，市场就会复苏。印度股市会出现剧烈波动，但投资者应当静候买入良机。
国大党在上周出人意料地在印度国会选举中获胜，接著出现了由谁出任印度总理的戏剧性变化，而股市的反应更是让投资者惊慌失措。继上周五下跌了6%之后，孟买证交所的基准指数30-Share Sensitive Index在本周一猛跌了11%，原因是市场担心由国大党领导的执政联盟可能会放缓执行，甚至放弃执行近年来推动印度经济蓬勃发展的市场开放政策。
但是，支持市场自由化的印度前财政部长曼莫汉?辛格(Manmohan Singh)有望出任新总理的消息令人欢欣鼓舞，很快在次日将人们的悲观情绪一扫而光。该指数当日回升了8.3%，周三继续攀升了2.6%，收于5006.10点。
孟买股市去年是全球表现最佳的股市之一，全年涨幅超过70%，涌入印度股市和债市的海外资金更是达到了创纪录的75亿美元，原因是外国投资者相信经济改革和消费支出的增长将继续促进印度经济的发展。今年到目前为止，外国投资者对印度股市和债市的净投资额在30亿美元以上。
孟买基金管理公司ASK Raymond James Securities India Ltd的首席执行长Bharat Shah说，印度经济的基本面并未因这次国会选举而改变。他仍然预计印度国内生产总值(GDP)在截至明年3月31日的财政年度将至少增长6%。
他说，如果你是著眼于几年回报的长线投资者，那么眼下你有许多可以带来稳定而丰厚回报的买进机会。他指的是软件、制药以及汽车行业。他表示，印度在今后几年内仍将是全球经济发展最快的国家之一。
即将上台的执政联盟将在今后几个月内进行组阁、制定经济政策并公布财政预算，投资者预计这一系列事件将使印度股市更加起伏不定。但有些投资者表示，他们将在股价回调时择机买进。
软件公司是看涨派目前关注的重点之一，尽管收益前景不错，软件类股的价格在过去一周里却出现大幅下跌。预计Infosys Technologies、Wipro和Satyam Computers Service等公司今年的利润将因全球需求的扩大而增长20%至40%。
瓦诺维奇说，他对印度信息技术业今年的前景很乐观，继本周一价格骤跌之后，信息技术类股看上去很有吸引力。
分析师们说，印度软件类股当前的本益比处于历史平均水平，本财年的本益比约为20倍。Infosys周三上涨94.80印度卢比，至4,981.55卢比，涨幅1.9%，预期本益比约为21倍。Wipro则下跌1.3%，至1,523.20卢比，本益比约为25倍。Satyam上涨1.4%至312.40卢比，本益比在14倍左右。
即使那些最受国会选举冲击的股票也有些许转机。Bharat Peetroleum以及Hindustan Petroleum等半官方的石油天然气公司的股价近来暴跌了30%以上，原因是市场担心新政府会取消出售这些企业部分股权的计划。市场对出售股权一事期待已久，并认为私有化将使企业提高效率和利润。
一些分析师认为，石油天然气类股的价格很低，即使政府取消私有化计划，现在也是买进的好时候。JM Capital的Krishnamurthy的说，所有上市的半国营企业的股息收益率都很不错，而从股价上看，好像它们明天就会停业似的。
Bharat Petroleum周三上涨了15.70卢比，至337.85卢比，股息率为5%。Hindustan Petroleum上涨了2.5%，至326.70卢比，股息率为6%。
银行类股的价格也很诱人。管理1.1亿美元资产的India Capital Fund的董事总经理约翰?索恩(John Thorn)说，许多印度一流银行的股价都低于其帐面价值。他认为，银行类股因市场担心新政府有可能推迟金融业的自由化进程而受影响，但银行类股的收益将继续随著经济的发展而增长。他说，即使一个很糟糕的政府也不会很快扰乱经济的发展。
当然，如果印度政局在今后几个月出现恶化，这无疑会影响印度的经济前景，而股市也无法免受全球加息浪潮以及对新兴市场兴趣下降的冲击。不过，乐观派们仍坚信动荡的市场上蕴含著机会。索恩说，人们在周一盲目慌张，周二又盲目买进，如今大家得慎重些。
