Kunal Desai of GIB Asset Management said investors eyeing companies with the potential to become “blue-chip companies of the future” should look to India.
The portfolio manager said India’s geopolitical positioning “is favorable in the Trump 2.0 era” as investors assess the country’s ability to take advantage of a potential trade war between China and the United States.
President-elect Donald Trump has pledged to impose steep tariffs on goods from China upon taking office. Tariffs on goods imported from China to the United States may benefit indiaAnalysts say this comes as companies move manufacturing to South Asian countries to avoid tariffs.
In an interview with CNBC’s Sylvia Amaro, Desai described India as “probably one of the most attractive, long-term and scalable investment opportunities in the world.”
In addition to geopolitics, Desai cited the country’s monetary sovereignty, improving return on equity (a key measure of a company’s profitability) and rising private investment as reasons for investment.
Prime Minister Modi’s “Make in India” initiative has also received widespread attention. Analysts call this a major boon For some Indian manufacturing companies.
For Desai, “One of the most attractive areas is cables, power cables and wires, which are involved in the development of urbanization and infrastructure projects in India.”
He said these companies not only see India as a “core market” but are also looking to expand and start exporting.
“Given the difficulties faced by Chinese companies in exporting, many Indian companies are taking advantage of customers’ desire to adopt a dual-sourcing approach in their supply chains,” Desai said.
Optimistic about China’s stock market
While investors are worried that Trump will accelerate “tough China policies” when he returns to office, the portfolio manager said that tensions between the United States and China have increased, and It is generally expected that the GDP growth target in 2025 will be around 5% and fiscal stimulus from Beijing – could “force Chinese policymakers to take action, essentially to revive the livestock spirit”.
Desai said companies with “high brand power,” competitive advantages and high profitability are most likely to benefit from a potential rebound in consumption in the coming years.
“So this creates a very interesting opportunity for companies that have seen their relative valuations fall but now create a more optimistic outlook for the next few years,” he said. Yum China Probably the main beneficiary.
Yum China is one of the largest fast food restaurants in China Yum Brands umbrella, which includes KFC, Taco Bell and Pizza Hut.
Desai also looks forward to Chinese e-commerce giants JingdongIt is one of the top 10 holdings in his portfolio, benefiting from a possible rebound in consumption.
He said that the next 18 months will see “There’s going to be a really strong dividend, buyback, capital return story out of China, which is what we’ve actually seen in the U.S. over the last four or five years.
