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A long-time India bull falls in with the bears

The asset manager had earlier called India a “haven” amid global trade disputes.

Bloomberg|
Last Updated: Feb 13, 2020, 02.05 PM IST
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The New York-based fund manager joins the growing ranks of global money managers who had touted the South Asian nation as their favorite pick for years, but now see threats to the investment case.
By Selcuk Gokoluk

A long-time India bull, which recommended the country’s stocks even at the height of an emerging-market sell-off in 2018, just fell in with the bears.

WisdomTree Investments Inc., with $64 billion under management, says it hasn’t lost faith in the country’s growth story, but it’s concerned rising political and social tensions will delay an economic recovery from the slowest pace of growth in six years. That contrasts with the asset manager’s earlier stance, when it called India a “haven” amid global trade disputes.

The New York-based fund manager joins the growing ranks of global money managers who had touted the South Asian nation as their favorite pick for years, but now see threats to the investment case. A policy pivot by Prime Minister Narendra Modi’s government has seen controversial political issues take precedence over economic matters.
Bloomberg
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“Modi’s latest initiatives are creating divisions over religion and national identity,” said Aneeka Gupta, an associate research director at WisdomTree’s London office. “Communal tensions between Hindus and Muslims are at risk of dragging on for years. Recovery is likely to be slow and protracted in 2020.”

  • WisdomTree has downgraded its view on India from marketweight to underweight
  • Says Mumbai stocks’ “sky-high valuations are unjustified” by current fundamentals “as earnings per share has been flat for a decade”

India was the world’s fastest-growing major economy until about a year ago, when a slowdown took hold amid waning consumer demand, rural hardship and ballooning bad loans in the banking system. The 4.5% expansion in the July-September period was about half of the growth rate in the same quarter three years earlier.
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