Pictured: Luke Ng, FE Advisory Asia
Structural reforms in India, backed by political will, are expected to deliver long-term benefits to the economy, in marked contrast to some other emerging markets.
Citing an example of India’s reforms, Luke Ng, senior vice president of research at FE Advisory Asia, said that the goods and services tax, which was introduced last month, is expected to unify the tax system. Previously, the tax rate across India’s numerous states varied widely. The unified tax system should make the logistics of industry far more efficient.
Ng also pointed to demographics. India’s rising population – currently second only to China at 1.32 billion – is a solid foundation for an increase in domestic consumption, which should benefit consumer sectors as well financial companies that focus on consumer lending.
India’s market has also been on a run. During the first half of this year, it was up 16.3%, according to data from Hong Kong’s Securities and Futures Commission. However, valuations are also one of the highest in the region at a price-to-earnings of 22.38.
Against this backdrop, Ng compares two India equity products: the Eastspring Investments India Equity Fund and the Invesco India Equity Fund.