Senior portfolio manager Asia Pacific equities
BNP Paribas Asset Management
We overweight India in our portfolio. In Indian equities market, we see opportunities in Indian private banks, IT services and consumption.
India benefits from important economic characteristics – large, young and growing populations, relatively low income per capita, and more domestic-oriented economy than the rest of Asia-Pacific. The pace of domestic reform is probably the most important driver of macro outlook for India.
Meanwhile, the accelerated reforms in India will help support the country’s long-term growth, in our view.
We have been maintaining our preference for India, for an underlying economic recovery from a cyclical slowdown driven by a lack of supply response towards the country’s rising demand, high inflation and twin deficits.
We are watchful of the upcoming changes and continue to assess, while we do not believe the current run up in share prices have fully captured longer term economic benefits, given ROE of the Indian market was on the verge of recovering from multi year low.
As an example, we favour Indian private banks and Non-Banking Financial Companies (NBFCs) over public banks, as their growth tailwind stems from both a low penetration and disproportionate market share gains.
Before 2016, SOE banks' market share represent approximately 70%, but this has changed.
These banks lost a lot of market share in late 1990s and early 2000s. SOE banks' market share in total bank lending has come down to 66-67% in FY 2017. This provides additional opportunities for Indian private banks to grab even more market shares over the medium to long term.