Search Results

We often hear this comment from prospective clients who are considering an investment in the FSSA Indian Subcontinent strategy, but are not yet convinced that a dedicated allocation would indeed be worth it. Call us biased, but we have been arguing in favour of a standalone investment in India for many years.

We have just returned from India – the first investment research trip in India for our entire team in over two years. It was a liberating break from constantly hearing “You’re on mute!” on video calls whilst simultaneously being forced to appreciate your kids’ music lessons in the adjoining room.

“For everything you say about India, the opposite is also equally true,” said a senior corporate executive, paraphrasing a quote from the British economist Joan Robinson, when we met him in India recently.

Corporate India’s resilience has been severely tested over the past decade. Since 2010, there has been a long, drawn-out downturn, caused by a series of corruption and scams, a banking and financial crisis, and now a devastating health pandemic.

Year to date, 34 companies have listed on the Indian exchanges raising a total of USD7.2 billion, a figure which has been surpassed in India only twice before in the last 12 years on an annual basis.

We have closely followed earnings across our portfolio companies to assess how successfully they have emerged from the initial impact of the pandemic.

In the first three months of this year, 17 new companies have listed on the mainboard exchanges in India, more than in all of 2019 or 2020.

After a recent meeting in Mumbai with the top management of Mahindra & Mahindra (M&M), we came back with a clear message – M&M’s commitment to its purpose does not mean that it will continue to operate loss-making businesses.

50x P/E! 70x P/E! 100x P/E! Valuations that were outrageous just a few years ago are commonly bandied about by most of the investment community these days. But, ask any respected business owner and they would shake their head in disbelief. The difference in perspective is critical.

Our investment philosophy is to back owners and managers with whom we feel strongly aligned, and track records of treating all stakeholders fairly.

At a team discussion last month to track management and board changes across our investment universe, a notification on the stock exchanges piqued our interest.

This time, we want to talk about why new listings are important to keep the market vibrant and to keep the entrepreneurial spirit in the country alive.

As with global automotive manufacturers, several Indian automotive original equipment manufacturers (OEMs) have recently announced that the shortage of semiconductor supply has impacted their production schedules.

As the saying goes, “There are two kinds of forecasters: those who don't know, and those who don't know they don't know.”

Land, Labour, Capital and Entrepreneurship. These are the well-known “Factors of Production” as defined by classical economists. The Entrepreneur (or Company) is the one that combines these factors to earn a profit.

India’s large population, its rapidly developing metropolises and its rich history of commerce, are all contributing to its journey in becoming an economic powerhouse. FSSA has been investing in India since the market first opened to foreign investors (in the early ‘90s); we then launched our dedicated India strategy in 1994.

As disposable incomes have grown, we find that Indian consumers are now moving up the ladder to buy more premium products, or buying discretionary products they could not previously afford.

From our discussions with companies in the FSSA Indian Subcontinent equity strategy, it is clear that they are well-positioned to deal with the impact of the second wave of the virus on their businesses.

That would perhaps be an accurate description of what drove some of my portfolio decisions as a young fund manager, roughly 15 years ago during the global financial crisis (GFC) meltdown.

Every company we speak to these days tells us about the cost pressure that they are facing, emanating from rising global commodity prices.

In our team, mistakes are teachable moments to be shared and learnt from. Thankfully, for us and our clients, in our history of investing in India we have managed to avoid the big ones.

Whilst valuations of many small and mid-cap companies are questionably high, we are being prudent; and we believe there are a number of reasons why India’s premium is well justified.

Last year, we wrote about the bubble we were witnessing in the initial public offerings (IPOs) in India. Now, we see a different type of bubble forming – in these cases, the business is often a proven one, with a strong track record and high return profiles.

FSSA Indian Subcontinent strategies cover India, Pakistan, Bangladesh and Sri Lanka. We tend to favour dominant consumer franchises, high quality private banks and infrastructure companies.

As the saying goes, those who stand for nothing, fall for everything. And so it is that we believe there isn’t a price for every business. Most are better left alone in the interests of sleeping better at night. Staying disciplined to our process means erring on the side of caution and avoiding companies where we have lingering suspicions about the governance practices.

In response to recent questions from our clients, we had a conversation with Martin Lau, managing partner and lead portfolio manager for the FSSA Asian Equity Plus and FSSA China Growth strategies.

News about US reciprocal tariffs have rocked global markets, as President Trump announced sweeping import taxes that were far higher and affected a much broader swathe of countries than expected.