The view on India's SOEs

Added 13th November 2015

HSBC GAM is overweight some government-linked sectors in India, in particular financial and energy enterprises.

The view on India's SOEs

Industry sources note that despite recent run-ups in equity valuations, certain sectors remain undervalued and may benefit from Prime Minister Narendra Modi’s push to liberalise foreign investment rules.

Sanjiv Duggal, head of Asian and India equities at HSBC Global Asset Management, told Fund Selector Asia that India's stock market has recovered from the third quarter global equity correction, though valuations still generally look expensive. Equities are trading at 17x forward price-to-earnings versus 9x for China equities. 

But the price-to-earnings of India's state-owned enterpises is 7.5x while China's is 8x. SOEs make up only 18% of the market capitalisation in India and 78% in China.


 Source: Credit Suisse, Wind, Bloomberg, Thomson Reuters as of 25 September 2015


He is overweight both government-linked and technology sectors in India.

In government-linked sectors, Duggal pointed out that the financial and energy segments are worth paying attention to as their earnings have kept pace with their stock prices.

Consumer support

Despite comparatively high Indian equity valuations, domestic demand in the country remains strong due to the continuous expansion of the middle-class, according to a note by BSI Bank.

The lender said that consumer sentiment remains healthy and predicted that the country's 2015 GDP growth would be 7.0-7.5%.

“The country’s fiscal deficit is under control, there is a significantly narrower current account deficit, the country’s currency is stable, and falling inflation leaves room for interest rate cuts,” BSI Bank noted.




Visitor's Comments Add your comment

Add Your Comment

We won't publish your address


FSA Investment Forums: Singapore & Hong Kong 2016

Singapore, Tuesday 25th October

Hong Kong, Thursday 27th October

FSA Investment Forum: Manila 2016

Wednesday 23rd November