“If Asia looks better in aggregate on comparative valuations, there is one market where valuations are undoubtedly challenging. That is GREED & fear’s long-term favourite, India. The Nifty index now trades at 18.8x 12-month forward earnings, compared with a historic 10-year average of 17.2x,” Wood said in his weekly note.
However, even if the valuations are a tactical concern, Wood said India remains by far the best domestic demand story structurally in the Asia and emerging market universe.
Since its inception at the end of Q3 of 2002, his portfolio has risen on a total-return basis by 2,683% in US dollar terms as at the end of 2022, compared with a 512% increase in the MSCI AC Asia ex-Japan Index and a 603% increase in the S&P500 during the period. This means the portfolio has risen by an annualised 17.9% since inception, compared with an annualised 9.4% increase in the MSCI AC Asia ex-Japan Index and an annualised 10.1% gain in the S&P500.
The portfolio, which remains primarily geared to the long-term domestic demand story in India, is 39% invested in India, with 22% exposure to China. There is also a 21% allocation to energy, resources and gold.
Wood’s long-only equity portfolio for India, launched on 1 July 2021, rose by 1.7% last quarter in US dollar terms on a total-return basis, compared with a 2.1% gain in the MSCI India benchmark. For 2022 as a whole, it declined by 8.4% compared with a 7.5% decline in the benchmark.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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