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moneysense.ca, 19/06/06
Asia’s Other Emerging Power
Time magazine has a series of excellent stories in its latest issue on Asia’s other emerging power: India. While the outsourcing story is fairly well known, I was surprised to learn that large companies like Hyundai Motors, L.G. Electronics and Nokia are setting up manufacturing plants in India. Another story describes the metamorphosis of the Tata Group, a giant conglomerate involved in everything from hotels to tea (Tetley), from a sleepy company to a formidable competitor.
I was really interested in the article (titled How to Ride the Elephant?) that talks about investing in India. The Bombay stock market has been in a free fall despite recovering some of the losses in the past week. Unfortunately, the article does not mention that investors can use closed-end funds like the India Fund (IFN), Morgan Stanley India Investment Fund (IIF) to get exposure to the market. One drawback with these funds is that they trade at a huge premium to Net Asset Value of 32% and 10% respectively.
moneysense.ca, 19/06/06
We will definitely see a “Big Move” of major businesses from China to India in the next 10-15 years. Make sense to start investing in the country right now.
Do you know what is the best way to buy either of these funds? MS website states i need to have $50,000/- in their funds. Blackstone does not have any info on the website. May be i should call them.
About the funds:
1) I am from India and did not know about these funds. Thank you for your posting.
2) I looked at the holdings both of the funds are very good. The IFN has good % of Infosys which is very good IT firm.
3) I am not sure how the interest rates are going to affect the big picture. But ones the storm is over these funds are very good exposure to Indian economy.
A: You can buy these funds through your brokerage. It is as simple as asking for a quote for IFN or IIF and putting in an order. Like any stock, there is no minimum or maximum you need to invest.
You can investigate these funds using ETF Connect. Like I mentioned, you need to be aware that these funds are trading at a big premium to the underlying NAV.
FYI. India has laws in place that prevent foreign direct investment in their financial securities. There are many other pitfalls to investing in any company located overseas, such as whether their accounting complies with GAAP principles and if some class action lawsuit were to take place due to fraudulent activities, would foreigners be able to recoup any of their investment? In my opinion, if any foreign company doesn’t meet the listing requirements to be an ADR (american depositary receipt) on NYSE, then I shouldn’t be investing in it. There are also some 100% foreign companies that list on the TSX-Venture Exchange and CNQ, but they aren’t big enough to be worth writing home about…
Oh, I forgot to mention (despite me being pessimistic about investing in developing markets because foreign shareholder’s rights are unknown), you also have the Excel Funds which specializes in investing in India and China.
I wonder whether there is a hedge fund that invests in developing markets? The volatility of their markets should be good for a well-managed fund which invests in little more than call and put options.