Source: Snowball APP, Author: Global stock information, (Varanasi Investment
Eastern time on September 12, 2024 12:59 pm ishares MSCI India ETF (Inda) Flin, Indy JP Study SummaryJaipur Stock
After the election, the inflow of foreign capital picked up.
Catalysts related to index may bring more capital inflows.
The InDa focusing on large -cap stocks is in a favorable position and is expected to seize the chance of rising.
Swiss media vision
This year, large Indian stocks have once again won emerging markets. Therefore, India’s weight in the main benchmark index has also risen steadily.Last week, India reached another new milestone in this regard, replacing India as the country with the largest weight of the MSCI Emerging Marketing Market Index ("MSCI").
As I discussed in the article, from the perspective of "capital flow", its impact is quite significant, because of global assets that track these indexes, the larger percentage of assets (MSCI is $ 120 billion, and the MSCI emerging market index is the indexMore than $ 500 billion) will be forced into India.As India’s destiny continues to run counter to the world, the larger index -related catalysts still have a lot of space, and Ishares’s flagship MSCI India ETF (BATS: INDA) will become the main "capital flow" beneficiary.
Of course, if there is no fundamental support, the technical "capital flow" is meaningless.In this regard, India has many advantages, from nominal GDP growth rates exceeding 10% (the fastest growth in major world economies), to profit quality (10% of the return on equity in high) and growth (10% high year -on -year growthThe perfect combination of rate).Coupled with the unstoppable bid in China, it is difficult to imagine that India’s growth rate will slow down in the short term.
Data from YCharts Foreign equity bidding continues to increase …
One of the most striking facts in the Indian stock market rebound is that so far, foreign investors have a very low degree of participation, which is in sharp contrast to the inflow of domestic stocks.In fact, on the occasion of the second quarter election season, foreign institutional investors (FII) are the net seller of Indian stocks.Now the policy continuity occupies the upper hand.However, foreign buying surge has surged, with more than $ 10 billion after the election.Please note that this includes the period when FII was sold in large quantities in the third quarter. At that time, global arbitrage transactions were liquidating.
National Science Development Agency
The good news is that India has now replaced India as the largest index in the MSCI emerging market index, and foreign bids may increase significantly.Next is the much larger MSCI emerging market index (> 500 billion US dollars, while MSCI is US $ 120 billion), and the gap between the two has shrunk significantly in recent years.In addition, there is a global index with much larger scale, and India’s percentage base is much smaller.
The key meaning here is that greater index weight means that passive funds and "benchmark consciousness" active funds have more purchasing pressure (compulsory).In short, the strong and continuous technology from foreign investors will be particularly conducive to large -cap stocks (the highest foreign participation) and Inda focusing on large -cap stocks.… The bid of foreign fixed income is also the same
On the other hand, although foreign capital inflows into the Indian sovereign debt market, although less discussion, it has received impressive attention.For example, data in August show that inflows are accelerating-this is undoubtedly due to India’s recently included in JP Morgan Chase’s most important government bond index-emerging market (GBI-EM) benchmark, as well as policy continuity after election.Now, India’s GBI-EM index weight will continue to rise until the target of 10% in early 2025 (currently about 3%).As the Federal Reserve ’s expected expected US Treasury yields are now much lower, it is expected that more foreign debt will flow into the end of the year.
The inflow of sovereign debt is a good sign for the stock market, because they reduce the "bottom line" of capital costs.For example, a lower risk -free interest rate (represented by 10 -year Indian government bonds) directly affects the equity cost of discounted future cash flow, thereby pushing the stock valuation.For enterprises, obtaining low -cost debt financing can release more growth opportunities and increase long -term potential returns of shareholders.
In my opinion, in the context of these huge technical smooth winds and the profitability of Indian enterprises to continue to maintain a strong trend (a tens of percent of the growth rate), INDA’s current expected price -earnings ratio is about 24 times, and it is notIt’s expensive.
As a "capital flow" beneficiary as "capital flow"
Because foreign investors’ capital flows are often concentrated in large -cap stocks in India, it is very meaningful to grasp the theme of "capital flow" by focusing on ETFs focusing on large -cap stocks.The top is Inda, which is the Indian ETF with the largest scale (about $ 11.3 billion in managing assets) and the strongest liquidity (buying/selling about 2bps).
Ishares
In other respects, the fund has adopted a clear "intermediate position" strategy.For example, its cost structure is not matched with 0.19% provided by FTSE INDIA ETF (Flin) of Franklin, Franklin, but it is still much lower than other large -scale equity such as ISHARES’s INDIA 50 ETF (INDY).As for the construction of investment portfolios, the coverage of INDA (151 stocks) is less than Flin (231 stocks), but it is more than 50 stocks with high concentration.Therefore, compared with Flin and Indy, Inda’s performance is in a "middle position."
Data from YChartsNew Delhi Stock Exchange
Now, no one knows whether the breadth will continue to become the magic weapon of the large -cap stock. If this priority is reversed during a period of economic downturn, I will not be surprised at all.On the other hand, the easier to undertake is that Ishares can maintain the narrow "tracking error" of INDA (that is, the gap with the performance of the MSCI India benchmark) -ly, as India enters a higher capital tax system, this is a particularly important factor.Therefore, in general, for those who want to use India’s "capital flow" to be unknown investors, Inda is still very attractive.Summarize
As the global investment portfolio’s allocation of India has continued to rise steadily, Inda, which focuses on large -cap stocks, stands out, becoming an excellent choice for investing in the theme.That’s right, the valuation is also high, but compared to a very strong fundamental and technical background, India’s risk/return is still as attractive as before.
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