Overseas investors can’t ignore India if they seek higher returns: Manulife

Amid uncertainty about global economic growth, investors are looking for markets that are driven by domestic demand, have room for lower interest rates

Overseas investors chasing higher returns can’t ignore India’s stocks as its economy ranks among the world’s strongest and bears the fruit of government-led reforms, according to Manulife Asset Management.

“As China faces uncertainty after the trade war, money now needs to find a market that is large and growing, and India is among them,” Rana Gupta, managing director of Indian equities at Manulife Asset Management Singapore, said in an interview in Mumbai.

“India’s adding a few trillion dollars to the economy and that’s how it obviously generates interest.” Foreign investors have pumped more than $11 billion into Indian equities this year on bets there will be political stability and more room for a majority government to push for economic reform. The Sensex is near a record high set last month, even after data in May showed the GDP expanded at the slowest pace in several quarters, undermining the nation’s status as the world’s fastest-growing major economy.

Amid uncertainty about global economic growth, investors are looking for markets that are driven by domestic demand, have room for lower interest rates, and are under a stable government that doesn’t indulge in populist spending, Gupta said.

About 29 per cent of Gupta’s $257 million Manulife India Equity Fund has holdings in banks and financial companies.