By Francisco


India: Is the recovery here?

  • Although economic growth was suboptimal in CY2019 at 5.3%, 2020 began strongly with PMI data in Q1 reaching 8-year highs
  • Coronavirus has delayed this turnaround, but not destroyed the green shoots emanating from rural areas
  • The government stimulus package remains underappreciated by the stock market
  • Reform momentum has restarted
  • Although there are risks to our thesis, we believe that they are well-managed at this juncture
  • Our primary focus remains on companies that will benefit from domestic, particularly rural, opportunities providing exposure to an uncorrelated source of growth versus the expected recession in Developed Markets
  • The increasing geo-political tension between China and USA could provide economic opportunities for India over the medium term
  • Given the favourable structural characteristics of India (e.g. demographics, and the shift from the informal to formal economy), the positive near-term outlook and compelling valuations, we believe that this is an exciting, less-correlated opportunity for the long-term investor

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