Indian equities better than China? This $400 billion investor finds comfort in desi stocks

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Published: April 25, 2018 1:55:07 PM

While a few top market voices have raised concerns that the recent scams may further keep FII’s from investing in India, Aberdeen AMC is finding comfort in Indian stocks on better corporate governance as compared to China.

Hugh Young, Asia head for Aberdeen AM, says that while China stocks are currently cheaper than India, as far as valuations are concerned, Indian equities provide comfort on better corporate governance.

While a few top market voices have raised concerns that the recent scams may further keep FII’s from investing in India, Aberdeen AMC is finding comfort in Indian stocks on better corporate governance as compared to China. Hugh Young, Asia head for Aberdeen AM, told CNBC TV18 that China stocks are currently cheaper than India, as far as valuations are concerned, however, Indian equities provide comfort on better corporate governance. According to the company’s website, the firm has $401.2 billion assets under management and advice.

Hugh Young says that he expects further interest rate hikes in India, which will come as a negative for the indian stock market. According to the expert, the heydays for Indian IT sector are over. Hugh Young points out that stretched valuations are a key concern in consumption space as well. According to him, an upside in earnings is needed to justify the valutions.

So, which stocks is he betting on in India? In the interview, Hugh Young shares that Aberdeen has holdings in HDFC Life as well as Gruh Finance. HDFC Life Insurance has posted a 40.4 percent on year rise in its net profit to Rs 346.86 crore in the quarter ended March-18, compared to same quarter last fiscal. The new business premiums for FY18 has also recorded a 32 percent growth and stood at Rs 11,350 crore.

Notably, this was the first quarterly results reported by the company post listing for which the insurer reported results in November 2017. HDFC Life shares are trading at Rs 500 as compared to issue price of Rs 290, implying a return of more than 72% in five months. Meanwhile, Gruh Finance has posted a 18.16 per cent rise in net profit to Rs 130.51 crore against Rs 110.45 crore in the corresponding quarter last fiscal. Gruh Finance shares were trading at Rs 668.4, down by more than 0.5%.

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