India story compelling, but there are merits to diversification, says Devina Mehra, First Global

By admin On Jan 24, 2023

The India story is compelling but one still needs to look beyond one geography, says Devina Mehra, Chairperson and MD, First Global. Speaking at the Market Today Summit, Mehra, in a session moderated by BT’s Global Business Editor Udayan Mukherjee, noted that India accounts for just 3.5 per cent of the world’s market capitaisation. She asked why should one be investing 90-100 per cent of investible money in a single geography. Mehra said investors in every country have bias for home market but India’s case is pronounced. She noted that Canadian stock investors have 60 per cent of their investments in Canada, but the same country does not account for 60 per cent of the world equity market.

India’s case is pronounced, as the country historically did not have capital account convertibility, she noted.

Mehra said there was a time when one could take out only $500 once every three years. At present, “the liberalised remittance scheme allows you very good amount to under 250,000 per annum, which means in a family of four that’s million dollars,” she said.

Mehra said Indians have still not really gotten around to thinking about global investing and even if they think of global investing, they think a Nasdaq ETF is enough, she said. That, she said, is not global investing.

True global investing means looking at geographies and all asset classes, she said.

Mehra recalled how the Asian crisis panned out approximately 25 years ago. That time, in a period of one year, Asian markets such as Taiwan, Indonesia, Thailand and South Korea fell 50-90 per cent, she recalled.

“These were not basket-based economies. These were the Asian Tigers. India had wanted to be an Asian Tiger, it wanted to match growth rates of such country. Yet if you were an Indonesian investor, you would have seen your networth wiped out by 90 per cent in a single year,” she said. Mehra said it was a wake up call for her.

Mehra said when she started working in 80s, rupee quoted at 12 level against the dollar. The rupee has depreciated 85 per cent since then.

When you talk of long-term planning, you have to look at global investing. That means, over a period of time, at least 30 per cent, if not more, of one’s assets should be global, Mehra said.

“It is that old adage of not putting all your eggs in one basket is as simple as that. While India will outperform, longer-term, you have to look at global investing. If you just buy a single other market, even if it is the largest market US that is still not global because leadership changes, no theme last forever, she said.

Ridham Desai, MD, Morgan Stanley India; Kenneth Andrade, founder and CIO, Old Bridge Capital and Saurabh Mukherjea, founder and CIO, Marcellus Investment Managers were other panellists in the debate.

Meanwhile, Business Today on Tuesday launched the new Markets Today page.

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