Why Canadian financial advisors should be looking to India

Could one emerging market actually offer better prospects than investing at home?

Why Canadian financial advisors should be looking to India
With a GDP growth forecast that far surpasses that of our own country for the year ahead; a positive impact from lower oil prices; a significantly lower median age; and 100 million middle class compared to just 10 million here; it may be time to invest in India ahead of Canada.

That’s the verdict of Francis Sabourin, director and portfolio manager at Richardson GMP. Speaking exclusively to Wealth Professional, he outlined why India is such a strong investment opportunity – with a host of reforms in the country recently, including foreign direct investment, the Land Acquisition Bill, the coal and power sector, direct transfer subsidies and streamlined tax regimes, helping to boost opportunities for foreign investors.

“India has always been strapped or labeled as a red tape country , so with these reforms - some will be popular and successful and some others not necessarily - this will help their own citizens and companies to grow and see a brighter economic future,” he said.

“Foreign investors are embracing these changes in a good way because India needs foreign investors as much the rest of the world needs India. Opening its economy and capital market to foreign investors is a smart long term decision because everything is interrelated in the world now. India is doing it one step at the time.”

In fact, Sabourin would place India ahead of other emerging markets such as China and Brazil. 
“Obviously Brazil or China has their own specific issues and India has its own too,” he said. “I think India with PM Modi is at an early stage of economics, social and political changes compared to China where its economy is more mature and is transitioning from an industrial economy to a service economy with a slowing GDP growth.

“In the case of Brazil, the country is facing many uphill battles on several fronts – it is spending heavily for the Rio games but once this is over, reality will still be there. So for me, in the emerging markets, India is still my top pick. 

“Of course, the Indian stock market is not cheap based on different metrics compared to other emerging markets but the fundamentals are there for long term value investors.”

Christine Tan, chief investment officer at ExcelFunds, meanwhile, believes that India’s strengths actually put it ahead of most of its developed counterparts.

“India is a strong and improving growth story within the context of a slowing global macro,” she said. “Hence we are overweight with India across all portfolios that include India in their universe and position the Excel India Fund as the ‘growth’ idea to advisors. We believe emerging markets are overall significantly more attractive that their developed market counterparts.”

What is your opinion on India as an emerging market investment opportunity? Leave a comment below with your thoughts.