Barings Asset Management just launched a new fund in the U.K. that invests in Indian equities according to a fundsnet article. Barings believes the best opportunities in this battered market rest in two sectors that generally offer stability, healthcare and telecom. It cited healthcare as an area with strong earnings visibility and good cash flows. In addition, the presence of many pharmaceutical companies in India was highlighted as an opportunity for growth, as the companies are able to leverage cost advantages in competing in the generic drug market worldwide.
Barings was also positive about the telecom sector. The India subscription rate to mobile devices is growing at break-neck speeds and the actual amount of subscribers in India is projected to be 3 times larger than the entire U.S. population toward the end of 2012. In addition the Indian government is relaxing restrictions in this industry that should lead to more consolidation and profitability. Telecom, especially as an access point for the internet, is clearly destined for more growth.
Currently, there aren’t any India ETFs that focus in these two sectors although there have been filings to launch ETFs focused in these areas by Direxion and EG Shares. Until then, here is the telecom and healthcare exposure within the largest and most broad based India ETFs: PIN, EPI and INDY.
(Click chart to enlarge)
PowerShares' PIN is the most attractive ETF to gain exposure to the Healthcare and Telecom sectors currently.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Christian Magoon is the publisher of IndiaETFs.com.
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