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India is growing in influence on the world stage, becoming a burgeoning leader and its vibrant market is worth paying attention to, according to Dina Ting, Head of Global Index Portfolio Management, Franklin Templeton ETFs.
AsiaFundManagers.com: In September, India hosted the G20 summit and thus, secured a place among the world’s leading nations. Why was this seen as a capstone?
Dina Ting: In June, Prime Minister Narendra Modi made a historic official state visit to Washington, which underscored strengthening cooperation between the two powers. In the short time since then, we’ve also seen a number of impressive achievements that made way for India to position itself as a dominant future leader: The world’s most populous nation celebrated a milestone in space exploration, engineering and technology when it became the first country to land an unmanned robotic spacecraft near the moon’s south pole in late August. The historic lunar mission – which made India just the fourth country to touch down on the moon after the United States, the Soviet Union and China – was designed to search for signs of frozen water and other elements. Mere days later, India’s triumphant mission to study the sun’s outer atmosphere for a better understanding of space weather fortified its assertiveness on the world stage.
AsiaFundManagers.com: Does that mean that hosting the G20 summit was just another logical step in India’s progression?
Dina Ting: Yes, that is correct. It underlined these successes. Additionally, India had an important role in an agreement with regard to areas such as debt resolution, overhauling institutions like the World Bank and formally welcoming the African Union to the bloc for better representation. India also helped steer the leaders in rethinking deep divisions over the war in Ukraine to produce a consensus document.
AsiaFundManagers.com: What role did Prime Minister Narendra Modi play within theses developments?
Dina Ting: Prime Minister Modi took the opportunity to further promote several measures aimed at better integrating the “Global South’s” developmental needs and ambitions with that of the G20. He announced a new multilateral rail and sea corridor project to connect India with the Middle East and the European Union, describing it as a beacon of partnership and innovation. In such an environment of shifting global political alliances, the trade pact stands to be a compelling counterweight to China’s vast Belt-and-Road infrastructure corridor. Modi also met with US President Joe Biden, and the two leaders issued a 29-point joint statement which outlined areas of cooperation toward mutually beneficial goals, including resilient global supply chains and scientific and technological research.
AsiaFundManagers.com: This sounds like a move with which India wants to take a position further away from China. Is this a politically and economically smart decision?
Dina Ting: It appears so, yes. Diversifying away from China has led to a surge of new investment for India, where companies like Amazon, Apple, Boeing, Samsung and Nokia are banking on the country as a formidable manufacturing alternative. China’s weaker-than-expected economic recovery furthermore appears to be lending positive momentum to Indian equities, especially among international investors who have favored smaller, domestically focused companies.
AsiaFundManagers.com: Did this have an influence on the equity market in the country and if yes, how so?
Dina Ting: It did. Last year, India’s equity market experienced significant outflows, but the tide seems to be turning. At the end of the first quarter, overseas investors saw renewed appeal in Indian midcap stocks – the S&P BSE MidCap Index rose more than 20%, compared to a 7.4% gain in the S&P BSE Sensex Index, which is India’s most tracked bellwether index, designed to measure the performance of its 30 largest blue chips.* Bloomberg data revealed that India’s equity market received about US$15.5 billion in net foreign inflows year-to-date through August, roughly US$1.5 billion short of cancelling last year’s record outflow.
AsiaFundManagers.com: And what about India’s GDP? How did it develop because of the influx in foreign investments?
Dina Ting: The gross domestic product (GDP) developed impressively. India’s GDP expanded 7.8% on an annual basis in the June quarter – picking up pace from the prior quarter when it grew 6.1%.
AsiaFundManagers.com: And what does this mean for smaller companies in the country?
Dina Ting: We believe this bodes well for smaller, more domestically focused companies. Improving infrastructure in the fast-growing economy should continue to attract more multinationals to set up shop, further advancing India’s overall economy and potentially benefiting small-and mid-capitalization firms. For investors seeking more exposure to India’s growing segment of mid-cap stocks, in our view, it’s worth paying attention to deviations in index construction.
AsiaFundManagers.com: What is the composition of smaller-caps in the market, and what is their influence on market performance?
Dina Ting: About 32% of the 210 constituents of the FTSE India Capped Index were smaller-cap holdings (under $5 bn market cap) as of the end of August 2023, while the MSCI India Index, which has 115 companies, held less than a 21% concentration to smaller companies.* In terms of performance, the FTSE India Capped Index has returned 13.5% year-to-date, compared to 10.7% for the MSCI India Index.**
Contributors to performance include mid-cap firms not represented within the more mega-cap focused MSCI India Index. These included health care firms Zydus Life Sciences and Glenmark Pharmaceuticals as well as Exide Industries, which makes batteries for railways and automotives.
AsiaFundManagers.com: To sum it up, what would your advice to investors be when it comes to investments in Indian shares?
Dina Ting: In our view, India’s structural trends, rising affluence, expanding manufacturing prowess, government reforms and burgeoning influence on the world stage, are compelling growth drivers that investors should be watching closely. There will surely be many interesting opportunities in the future.
AsiaFundManagers.com: Thank you very much for the interview.
Dina Ting
Head of Global Index Portfolio Management
Franklin Templeton
Dina Ting is senior vice president and head of Global Index Portfolio Management at Franklin Templeton. Her team is responsible for managing Franklin Templeton’s suite of index-based strategies, including ETFs. Prior to joining the firm in 2015, Ting spent nearly a decade at BlackRock, where she led the Institutional Emerging Markets team that managed over 70 global equity portfolios for clients worldwide. She also managed a multitude of iShares ETFs covering smart beta, global real estate, sector-based and emerging market strategies.
* FactSet, MSCI August 31, 2023
** Bloomberg, September 11, 2023
