New York: India offers an overlooked opportunity because reforms there may help growth, and the nation is better shielded than other emerging markets from risks tied to policy shifts in the US, said Toby Nangle, head of multi-asset allocation at Columbia Threadneedle Investments.
“It’s a bit of a sleeper trade," he said on Thursday in an interview on Bloomberg Television. “There’s a nice, clear structural story which isn’t contingent on the whims of Washington."
India’s S&P BSE Sensex Index has jumped 11% this year, part of a global rally in emerging markets from Argentina to Vietnam on optimism about US President Donald Trump’s focus on growth. India has been pursuing the most significant economic reform since the 1990s as the government moves toward the launch of a nationwide sales tax regime, and sovereign bonds have been gaining on speculation that a stronger currency will lure more foreign inflows into its debt market.
Nations such as Mexico and China rely more on exporting to the US, which has been a source of growth for decades. Trump has cast doubt on the endurance of cross-border commerce after saying his country was burned by trade deals.
“India is much more of a three- to five-year trade on some strong fundamental drivers which have been continuing in earnest," he said.
Nangle helps oversee money at Columbia Threadneedle, the $454 billion asset manager at Ameriprise Financial Inc. He advocates seeking opportunities that might be too small for major global investors.
‘Lowest hanging fruit’
“Where’s the lowest hanging fruit within emerging markets?" Nangle said. “It looks to be actually India."
The money manager also has been investing in Japanese equities, which he expects to benefit if inflation picks up. His comments echo remarks from DoubleLine Capital’s Jeffrey Gundlach, who said Tokyo stocks are still cheap.
“We’re pretty positive and have been pretty positive for some time on Japanese equities," Nangle said. “There’s a whole variety of domestic factors that are driving a lot of that call. But to be honest, it is something which gets a tailwind with a reflation trade."
Asked about investing in the UK, Nangle advised betting on commercial property through funds that reopened after being shut last year around the time that voters opted to leave the European Union.
“They’re offering real incomes which are really quite substantial," he said. “Much higher than bonds, much higher than equities. We’re talking about 6 to 7%." Bloomberg