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Consider three major global equity markets: China, India, and the US. Of the three, would you believe India has been the second-best performer over the past 30 years, well ahead of China? It’s true.
Figure 1 shows the cumulative total returns posted by the S&P 500 Index, the MSCI China Index, and the MSCI India Index from 31 December 1992 through 30 April 2022. Our clients have been uniformly surprised that China’s long-term performance has been so much lower than that of the US and India, especially given all the investor focus on China in recent years. And they’ve been even more surprised that India – a market many clients have more or less ignored – has fared so well over the long run.
As we commented recently: “In China, everything is because of the government; in India, everything is despite the government.”
While China has provided ample support to industry development over the decades, including putting in place world-class infrastructure for transport and distribution and offering material subsidies, this has not been the case in India. In effect, the cost of capital has been far higher in India than in China, while competition among industry players has been lower. In turn, we believe this has led to a ”survival of the fittest” outcome across the Indian equity market, with many companies that generate sustainably higher returns on capital emerging as “winners.” These high levels of return on capital have, to a large degree, driven the strong performance of the Indian market over time.
Of course, past results are no guarantee of future results. Having performed so strongly in recent years, it’s possible that India’s equity market may take a breather for a period. That being said, India is an often-overlooked performance story that we believe may still have further to go. Looking across the market today, we continue to see a range of bottom-up investment opportunities in companies that we think have the ability to compound capital for years to come.
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China equity in 2023: Year of the stock pickerContinue reading
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Monthly Market Snapshot: November 2022Continue reading
Small-cap value: Strong past, bright future?
While equity markets have had a challenging recent past, history teaches us that there may be several reasons to be optimistic about small-cap value.
Thematic investing focus: The future of food
The global food system has reached a tipping point and change is coming, creating investment opportunities aided by demographic, policy, and innovation tailwinds.
Navigating the new global economy in 2023
This executive summary distills the points of view of several of our 2023 Outlook authors. Discover the risks and opportunities they see as we enter a new economic and market regime.
China equity in 2023: Year of the stock picker
Despite the potential risks of investing in China equity, Equity Portfolio Manager Bo Meunier believes there are attractive opportunities for patient, discerning stock pickers.
Health care outlook for 2023
Looking ahead to 2023, members of our health care team see meaningful innovation, supportive valuations, and a benign political and regulatory backdrop across biopharma, medical tech, and health care services sectors.
Monthly Market Snapshot: November 2022
Pivoting from innovation and growth to stability and value
In a more volatile world, stability may take priority over innovation, and that, explains Multi-Asset Strategist Adam Berger, would tend to favor value stocks over growth stocks.
China internet: Identifying opportunities amid stormy seas
Uncertainty in the Chinese internet company space has been elevated over the past few years. We believe that investors may benefit from tactical approach, rather than broad-based industry exposure.
What’s next for infrastructure?
Portfolio Manager Tom Levering and Global Industry Analyst Tim Casaletto explore the outlook for infrastructure assets in 2023 across each of the key areas.
Semiconductor industry faces near-term headwinds, long-term growth
Global Industry Analyst Eunhak Bae analyzes short-term headwinds and long-term opportunities in the semiconductor industry.
Reality bites: Are equity markets too upbeat?
Cautious on global equity risk, Global Investment Strategist Nanette Abuhoff Jacobson suggests that investors favor higher-quality stocks and take a look at high-quality fixed income.