Investors finding growth in India but valuation comfort in China: CLSA
Shaun Cochran, Head of Research at CLSA, discussed the investor's dilemma of opting for India's growth potential versus China's valuation comfort.
Shaun Cochran, Head of Research at CLSA, believes that while investors are drawn to India for its robust growth potential, they are also attracted to China's compelling valuations.
India has earned investor confidence over the past two decades, he said, highlighting the nation's ability to consistently deliver growth, coupled with the presence of robust and liquid companies that offer attractive investment opportunities.
However, the challenge for investors while looking at India is that it will always command premium valuation because it has growth, he said.
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Mark Mobius, founder of Mobius Capital Partners, also recently shared his views with CNBC-TV18 on the India versus China tradeoff for investors. Mobius is known as the Godfather of Emerging Markets investing,
"What we focus on is not necessarily the price earnings ratio, or the price to book value ratio, but we are looking at return on investment. And it's amazing when we do scans of the Indian market, how many companies have a high return on investment...," Mobius noted, while acknowledging that there will be investors who will want to go into China and keep investments there.
Herald Van Der Linde, Head of Asia Equity Strategy, presented a different perspective. Even if China performs exceptionally well, he predicts the capital flows to the country to likely come from other Asian economies like Korea, Japan, and Taiwan as people want to stay with India because of the strong growth story.
He noted that Chinese internet companies, particularly those trading in Hong Kong, have shown impressive growth, influenced by the declining bond yields. This trend suggests that China might initially outperform India as global economic conditions improve.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Nov 30, 2023 9:52 AM IST
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