Indore Stock:One week strategy said | Why can the Indian stock market stand out in recent years?
Since 2023, due to the economic cycle, economic policy, and the situation of industrial changes in different countries or regions in different countries or regions, the changes in asset prices have also been significantly differentiated.More and more investors recognize the importance of diversified asset allocation and global asset allocation, not only to allocate equity assets, but also other large categories of assets such as bonds and goods;Large category assets.
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In recent years, the Indian stock market has gradually stood out. Although there are no other stock markets soaring in a period of time, through a relatively stable trend, the annual line has been realized.So, can the Indian stock market continue this trend in the future?What are the opportunities and risks?
In this issue of "One Week Strategy Theory", we invited [Dr. Liu Weilin, Fund Manager of the ICBC India Market] to share the latest views on the Indian stock market with us, and conducted in -depth answers to hot issues.Full of dry goods, let’s review it together!
Note: The risk level of the ICBC India market is high risk
The stock market is often a barometer of the economy, so do we want to ask how the current Indian economic performance is?
The Indian economy has performed well in recent years. In the last 2023-2024 fiscal year, India’s GDP increased by 8.2%year-on-yearIndore Stock. It is the fastest economic growth rate in major economies in the world.In the past few years, in addition to the impact of the epidemic in 2020, more than 6%of the economic growth rate is generally maintained.The World Monetary Fund is expected to maintain a medium and high-speed growth of 6.5%-7%in the next two years, and it is still ranked first among major world economies.
From the perspective of absolute quantity, in 2014, India’s GDP ranked 10th in the world; in 2018, the world’s 7th; at present, the world is 5th.The World Monetary Fund predicts that in the next two years, India’s GDP ranking may rise to third third (surpassing Germany and Japan).
The gap between India’s economic structure and India is large, with a relatively developed tertiary industry (service industry), accounting for more than 55%, and the primary industry and the second industry account for relatively low. In particular, the manufacturing industry accounts for only about 15%of GDP.It has not been greatly improved for more than ten years.In the past few years, India’s economic growth has mainly contributed by the tertiary industry, including finance and IT services. The growth of the construction industry has also been relatively fast.
In recent years, India’s high growth and two aspects of factors are relatively large. One is that the government has vigorously developed infrastructure, and the other is that the global economy is good.The Indian government’s infrastructure projects have driven the development of construction, building materials, steel and other industries. Overseas demand has made the Indian IT outsourcing industry and the petrochemical industry develop better.It is transmitted to India. These factors have reduced the bad debt rate of Indian financial institutions and increased profitability. After obtaining more income, residents also accelerated India’s consumption upgrade.
What is the development of the Indian securities market?
There are two major exchanges in India, including the Mumbai Exchange (Representative Index 30) established in 1875 and the Indian State Stock Exchange (representing index: nifty 50) in 1992.India’s securities market allows enterprises to be listed repeatedly on two exchanges, so most of India will be listed on the two exchanges at the same time.
At present, there are about 5,000 listed companies in the Indian market (but the number has not increased greatly in the past ten years, and the delisting system is strict). The total market value exceeds 5 trillion US dollars, which is second only to the United States, India, and Japan.The four major stock markets.
The Indian stock market has performed well for a long time, and India’s main index has increased an average annual rose of about 12%in the past ten years.The Indian market liquidity (transaction volume) is better in international countries in the world. The average daily turnover of the stock exceeds 100 billion yuan.
Foreign capital is an important pricing force in the Indian market. In India’s free circulation stocks, overseas investors hold about 37%.Overseas investors have entered the Indian market in the past 20 years, and in 2023, foreign capital inflows in India as high as US $ 20.7 billion.
What are the core factors of the long -term rise in Indian stock markets?
Everyone generally values the following points:
The first point is the overall economic development model of India.Many emerging market countries basically rely on some large resource products, and then drive the economy model, such as Russia, Brazil, South Africa, etc.However, India is not a country with a wealth of large resources. It mainly relies on demand driving and technological innovation promotion, and its stability is relatively strong.
The second point is the population level.India has surpassed India in 2023 and became the world’s first population.India’s age structure shows a relatively healthy pyramid type, with an average age of less than 29 years (India is about 40 years old).In addition, India ’s higher education enrollment rate has increased significantly since 1995. According to data from the World Bank’s statistics until 2015, India’ s higher education enrollment rate at that time was equivalent to the level of India around 2010.
Data source: World Bank
Of course, India’s illiterate rate is still relatively high.In addition, India’s labor costs are relatively low. For example, the salary of Indian IT engineers is equivalent to 1/6 of British IT engineers’ salary, which is equivalent to the level of 1/3 to 1/2 of my country’s engineers.On the whole, India’s labor costs are lower than Vietnam and Mexico.
The third point is geopolitics.After the Sino -US trade war in 2018, the United States tried to relocate some industrial chains in my country, such as low -end transfer to India, high -end Japan’s transfer to Japan, and also set up such a four -sided mechanism of "the United States, Japan, India and Australia". EssenceAlthough the progress is relatively slow, it has also led to the development of Indian manufacturing. At the same time, it has allowed overseas investors to see more growth potential, which in turn drives the re -evaluation of valuation.
What are the best industries in the Indian stock market in recent years?
India’s oil and petrochemical industry, due to the resale of Russia’s oil, has grown rapidly, and the secondary market also has a good return.
The automotive and communication industries have increased by more than 200%in the past five years, and the growth of the pharmaceutical industry (mainly generic drugs) has increased by about 187%. Overall, it is basically some consumer upgrades.
There is a detail. Before and after the re -election of Modi on June 3, the Indian stock market fluctuated significantly. Why?
In this election, the market’s expectations for Prime Minister Modi are a bit high. There are 572 votes in India. Police prediction predicts that Premier Modi may get 350 seats.The term of office was 282 and 303 seats, and the market forecast will be obtained at least half of the market, which is more than half, that is, 286 votes.However, the results of the voting on the day were announced that the People’s Party where Modi was located only received more than 240 seats, and there were not more than half. Therefore, it can only be combined with other small parties to exceed half.During the new term, whether Modi could smoothly promote his economic development policies to have different differences, and that day, there was a liquidity shock similar to the Japanese stock market some time ago.
Source: Wind Time: 2024/8/28
But from our perspective, the India’s economic development model, population advantage, and geographical advantage we mentioned above have not changed, and Modi is still governed, so we judge that it was a short -term decline.Later, in the process of Modi formed the new pavilion, including the Minister of the Interior, the Foreign Minister, and the ministers of some key departments, basically continued the original team. In addition, after the new fiscal budget came out, everyone found that the previous policy continued the previous policy.Guidance has not changed.Therefore, the Indian stock market began a continuous rise, which was a situation that happened at the time.
Is there any room for rising in the Indian stock market?Mumbai Stock Exchange
Objectively speaking, although the India’s economy has grown strongly in recent years, there are still some shortcomings compared to India: (1) There are no land finances, no big government, and there is no ability to quickly add leverage to the abilityTherefore, there will be a high probability that there will be as high as a high growth rate at the time; (2) the manufacturing foundation is relatively weak.
Taken together, India’s economic growth is expected to be more prominent in the next few years. The annual EPS growth of listed companies in India can reach about 10%.At the level of valuation, the current valuation of the Indian stock market is in the range of more than five years and below 1 times the standard deviation, which is not very cheap.At the same time, in India’s investor institutions, institutional investors account for the main partJaipur Investment. Therefore, the fluctuations of the Indian stock market are significantly smaller, and the difficulty of investment is relatively small. You can pay attention to this feature.
What risk points need to pay attention to?
There may be three points to pay attention to: (1) First of all, the high valuation risk we mentioned above;
Source: Wind Time: 2024/8/28
(2) The export part of India may be affected by the global economic recession. For example, hard landing or soft landing will affect the Indian economy more or less;
(3) Whether Modi’s economic development policy can work like expected.
How can domestic investors invest in the Indian stock market?
The most convenient way is to directly invest in the Indian market.Taking the Fund ICBC India Market (164824) as an example, there is an on -site share and off -site share, that is, everyone can purchase and redemption outside the court, or buy and sell on the court.
Source: Wind Time: 2024/8/28
Note: Historical performance does not represent the future
The risk level of the ICBC India market is medium and high risk
Of course, because of the problem of quota, it is no longer available outside the court; trading on the court must always pay attention to the discount premium (because the fund belongs to the Indian theme LOF fund, the net value of the off-site value shows the net value of T-2, so the on-site field is within the field, so the field on the field is therefore.When trading, you must compare T-2, but also consider the rise and fall of T-1 and T days).
Therefore, the investment in the Indian stock market must not only consider the rise and fall of the Indian stock market itself, but also consider the quota or discount premium.
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