India: Real Estate Bubble

Real Estate

CHA-AM Advisors

David Scott thinks this is the 2009 moment for the Indian house builders. Yes, it is that bad. The BSE Realty Index’s ROE barely beats the Indian 10-year government bond yield of 700bps, even with high leverage. These companies are not making their Economic Cost Of Capital which is why they need to issue so many new shares. And why not? Look at the valuations. The EV To Sales - the value of the firms in this index relative to one-year sales - is now at 15x which is at a record high. David suspects no real estate sector has ever been as aggressively capitalised as this one. The Chinese names never traded on anything like these multiples! As Indian real estate resumes its disinflationary boom, David expects some big earnings disappointments in the next year. Stocks highlighted include DLF, Godrej Properties and Macrotech Developers.

- 15 November, 2024

Asia ex-Japan fund positioning insights

Copley Fund Research

Steven Holden’s latest report mentions record fund ownership in Vietnam, with over a third of Asia ex-Japan funds now invested in the country. Average funds have now hit a record high of 1.01%, led by a rotation into financials and tech stocks, and key players such as JP Morgan and Fidelity signalling increased confidence in the Vietnamese market. Another rotation is also underway out of Chinese real estate into Indian equivalents, leading stocks like Phoenix Mills, Macrotech Developers, and DLF Limited to reach new ownership highs. In contrast, fund managers are reducing their positions in Hong Kong Exchanges and Clearing, with the stock falling to the 7th most widely held in the financials sector, reflecting a broader shift towards South Korean financial stocks.

- 06 September, 2024