The narrowing divide between China and India’s weight in the MSCI Indices
The spread between India and China weights in active Asia Ex-Japan funds has narrowed to the lowest levels in Copley’s 13-year history and now stands at 16.17% vs. a peak of 45.3% in Aug 20. China’s decline over this period has been dominated by Consumer Discretionary, Communication Services and Financials. 3 companies standout as key drivers of the move lower: Alibaba, Tencent and Ping An Insurance. Increases in fund weight have been minimal with PDD, BYD and Trip.com seeing moderate upticks. India’s rise has been driven by the Financials sector. Specifically, 3 banks: ICICI Bank, HDFC Bank and Axis Bank.
Edition: 180
- 23 February, 2024
HDFC Bank (HDFCB IN) India
Financials
This bank's recent underperformance creates an attractive entry point for long-term investors looking to own a high-quality franchise with a best-in-class management team and fantastic capital allocation track record. HDFC has an impeccable underwriting history with the lowest NPAs across major credit cycles in the last 28 years. This is despite growing its loan book by over 2x the industry average. With a long runway for growth ahead, and the stock trading at a 20% discount to its own 5-year average multiples, investors can expect 16%-18% compounded returns from here over the next 5 years. Click here for AlphaBox's 60-page initiation report.
Edition: 153
- 03 February, 2023
GEM Funds Investor Positioning Insights: India maximum divergence
Stephen Holden’s data highlights the growing divide between Value and Aggressive Growth managers in India - while Aggressive Growth investors double down, especially in Financials and Tech, Value managers are finding fewer opportunities to invest, and appear comfortable allowing their underweights to increase. That’s not to say there are no Value opportunities in India, just not enough to match either the benchmark weight, or the weight of their Growth peers. As the world focuses on a potential Growth to Value switch, in EM at least, India will be a key driver of relative performance between the two sets of investors.
Stocks highlighted include HDFC Bank, Housing Development Finance, Indian Oil Corp, Infosys and Tata Consultancy.
Edition: 134
- 29 April, 2022
FinTech & Financials: 2022 investment themes
Financials
Galliano's Financials Research
1. A shift into value in EM banks; cautious on digital banks - top picks are Sberbank, Banco do Brasil and HDFC Bank. Nubank likely to be one of the EM FinTech big negative surprises of 2022.
2. Southern Europe banks, position for the prospect of higher interest rates - highlights BBVA and Banco BPM.
3. Exchanges, competitive pressures are real, but are they priced in - B3 and Singapore Exchange standout.
4. Growth and value in digital payments - highlights Mastercard and, for its deep value, PagSeguro.
5. Digital wealth managers, picking a potential winner - BTG Pactual.
Edition: 126
- 07 January, 2022
HDFC Bank (HDFCB IN) India
Financials
Deafening silence from media and sell-side on HDFC’s ‘processing fee’ scandal - the latest revelations by a whistle blower reveal the shocking fact that India’s most valuable bank allegedly extorted fees from prospective loan customers who submitted false documents. If this practice is found to have been widespread then the RBI must impose stringent penalties. Hemindra Hazari believes that shareholders should review their exposures to the bank in light of these disclosures.
Edition: 120
- 01 October, 2021
Indian Banks: Screening for Investment Ideas
Financials
Galliano's Financials Research
Victor Galliano identifies 3 banks that can weather the expected worsening of credit quality in the coming quarters - he highlights Axis Bank as a restructuring and earnings recovery story and HDFC Bank for its high quality balance sheet and premium returns, which are not yet fully reflected in valuations. Victor also considers State Bank of India as an attractive value play, despite its lighter core capital ratio. Banks to avoid - Canara Bank (value trap) and Bandhan Bank (large micro-finance and SME credit risk exposure).
Edition: 119
- 17 September, 2021