On Oct 31 this year, Morgan Stanley issued a 127-page report on The New India. “We believe India is set to become the world’s third-largest economy and stock market by the end of this decade. As a consequence, India is gaining power in the world economy, and in our opinion, these idiosyncratic changes imply a once-in-a-generation shift and an opportunity for investors and companies,” the report states.
Unlike China, which is encountering a demographic time bomb, India offers a demographic dividend. According to Morgan Stanley, The New India will be led by offshoring, digital differentiation and energy transition.
CapitaLand India Trust (CLINT) is perhaps the only pure-play and sufficiently liquid India stock listed in Singapore and it benefits from perhaps all of Morgan Stanley’s theses on why investors should invest in India for the current decade.
Formerly Ascendas India Trust (Ascendas-Singbridge was acquired by CapitaLand in 2019) CLINT owns eight IT business parks, one logistics park, one industrial facility and one data centre development in India, with a total completed floor area of 15.5 million sq ft spread across Bangalore, Chennai, Hyderabad, Pune and Mumbai — India’s main commercial centres. In other words, CLINT was “New Economy” before “New Economy” was coined.
Although the Indian rupee (INR) has depreciated by more than 50% against the Singapore dollar since CLINT’s IPO in 2007, its NPI has grown steadily every year except in 2020 because of Covid. From 2007 to 2021, CLINT’s NPI recorded an 8% Cagr. DPU growth has been pretty steady as well. In 1H2022, CLINT’s DPU of 4.28 cents was up 2% y-o-y and compares with its first full year of DPU of 3.14 cents as at FY2008.
Other pure India plays are few and far between. Two India-focused ETFs are listed on the Singapore Exchange, iShares MSCI India Index ETF (SGD) managed by BlackRock and Lyxor MSCI India UCITS ETF (USD). The iShares MSCI India Index ETF trades in both Singapore dollars and the greenback. Its top 10 holdings are Reliance Industries, Infosys, ICICI Bank, Housing Development Finance Corp (HDFC), Tata Consultancy Services (TCS), Hindustan Unilever, Axis Bank, Bajaj Finance, Bharti Airtel and Larsen and Toubro.
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Lyxor MSCI India UCITS ETF trades in US$ and its top 10 holdings are the same as iShares MSCI India except for Asian Paints instead of Larsen and Toubro.
According to Bloomberg, Asia’s richest are Gautam Adani at No. 1 and Mukesh Ambani at No. 2, ahead of the likes of Zhong Shanshan, Zheng Yuqun and Pony Ma. Yet, the rich-poor divide in India is far larger than in China.
Morgan Stanley makes a case for consumer discretionary spending to rise as India’s GDP per capita has crossed the US$2,000 ($2,823.74) mark. “India’s income pyramid offers a unique breadth of consumption, in our view, with the top end spending like the richest in the world and the bottom end still relatively poor,” the report says.
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More interesting is the digital IndiaStack, India’s version of Web3. It is being designed as a public utility. Unlike private solutions, IndiaStack provides interoperability, democratises data and is decentralised.
Separately, for contrarian investors looking to buy into a collapse, there are the Lion-OCBC Securities China Leaders ETF, Xtrackers MSCI China UCITS ETF, United SSE 50 China ETF or the CSOP iEdge SREIT ETF, all in Singapore dollars.
