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Why India, why now?

Infrastructure, real estate boom & so much more

January 2021

Kristy Fong, Investment Manager
Aberdeen New India Investment Trust PLC

Why India?

  • Favourable demographics – India has a young population (median age of 31 vs 42 for China).
  • Digitisation is proving to be transformational in rolling out goods and services to India’s 1.3bn population. E.g. financial services, reorganising supply chains.
  • Hugely under-penetrated market – from housing, credit cards to hair conditioner – the structural growth potential of India is clear.
  • Reform agenda has now expanded to include labour, land and agriculture – this will help to further open the economy.
  • Existing reform agenda also includes big spending on infrastructure, making India more business friendly and recapitalising the banks.

Why Now?

  • Infrastructure boom – India’s infrastructure needs are great and new roads, rail/subway and airports will help unlock its growth potential.
  • Real estate boom – housing has never been so affordable as interest rates are low and policy supporting home ownership will drive development. The capital expenditure outlook for real estate looks bright.
  • Make in India 2.0 – a very targeted industrial policy to grow manufacturing and take market share from competitors like China. For example, Apple supply chain is moving to India.
  • Covid recovery – Demand has been sustained by strong rural spending and rising outlays on infrastructure. Urban areas are recovering too. India’s huge pharmaceutical sector can produce vaccines at scale and at low cost, and India has relatively low fatality rates (vs the world) due to its young demographics.

Why Aberdeen New India?

  • We focus on the highest quality companies operating in heavily under-penetrated segments of the market.
  • High conviction portfolio of circa 40 stocks – many have been long-term compounders for the portfolio for 10-20 years.

Our key investment themes:

  • Building India - urbanisation and an infrastructure boom is set to benefit property and infrastructure developers and materials producers such as cement.
  • Financial inclusion - digitisation is enabling the delivery of financial services to India’s under-served mass market.
  • Exporting talent - India’s giant tech services sector is helping global companies go digital and cloud-ready.
  • Aspiration - rising affluence in India is leading to fast growing premium consumer patterns in areas like financial services, autos, food and personal care.

Important Information

Risk factors you should consider prior to investing:

  • The value of investments and the income from them can fall and investors may get back less than the amount invested.
  • Past performance is not a guide to future results.
  • Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
  • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV.
  • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
  • Movements in exchange rates will impact on both the level of income received and the capital value of your investment.
  • There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
  • As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen.
  • The Company invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down.
  • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends.

 

Other important information:

Issued by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1XL. Registered in Scotland No. 108419. An investment trust should be considered only as part of a balanced portfolio. Under no circumstances should this information be considered as an offer or solicitation to deal in investments.

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Risk Warning
Risk warning
The value of investments and the income from them can go down as well as up and you may get back less than the amount invested. Please refer to the relevant Key Information Document (KID) prior to making an investment decision. Please be aware of scams that can affect investors.