Indian equity market excelled despite other emerging economies struggling: S African Fund manager

Johannesburg: South African investment platform Satrix has lauded the Indian equity market for exceptional growth while other emerging economies have been struggling.

“It has been four stellar years of growth for the Indian equity market despite a global pandemic and various regional instabilities plaguing other emerging economies during this time,” Satrix said in a statement on Friday.

One of the company’s products is the Satrix MSCI India Exchange Traded Fund (ETF), which holds 131 large and mid-cap Indian companies representing close to 85 percent of the Indian stock market.

Satrix said this gives investors diversified access to one of the world’s fastest-growing emerging market economies.

The ten largest companies in which the ETF is invested are in the Financial and Technology sectors — Reliance Industries, ICICI Bank, Infosys, HDFC Bank, Tata Consultancy Services, Axis Bank, Bharti Airtel, and Bajaj Finance.

Others in the top ten are industrial giant Larsen and Toubro and consumer goods manufacturer Hindustan Unilever.

“Year to date, the MSCI India Index delivered a return of 11.8 percent to the end of November, compared to a 5.7 percent return from the MSCI Emerging Markets (EM) group and -9 percent for the other Asian giant, China (all in USD total returns),” Satrix said.

The MSCI India Index is designed to measure the performance of the large and mid-cap segments of the Indian market. With 122 constituents, the index covers approximately 85 percent of the Indian equity universe.

Over three years, the Indian Index delivered a healthy 12.7 percent annualised return, compared to the broader emerging market group’s -4 percent and China’s -17 percent return over the same period.

“China especially, and emerging market indices more broadly, have struggled through severe lockdown restrictions and a slow post-Covid recovery. In this grouping, India stands out – delivering returns more in line with developed market indices, buoyed by a strong recovery in tech companies,” Satrix said, adding that USD 1 invested in the MSCI India Index four years ago would have returned close to 50 percent by now.

“This performance is not accidental as India has shown itself to be quite the all-rounder. With an economy growing at a healthy pace, it has managed to increase GDP per capita while evolving towards higher-margin industries.

“In recent years India has mimicked the US economy through its burgeoning technology and IT software and services industries, making it more resilient to the volatile nature of global commodity prices that often plague other emerging market economies.

“Compared to China, India has also been less actively engaged in geopolitical fragmentation – working to cement trade deals with both its emerging partners as well as developed market counterparts,” Satrix stated.

The company said that adding Indian equity exposure through its Satrix MSCI India ETF could offer a good diversifier from local and global developed market equities, acting as an important ballast through its diversified returns, but cautioned that it was important to seek professional advice or conduct thorough research to consider individual risk tolerance before making investment decisions.