US asset manager Pinebridge looks to Adani saga to load up shares in India

While short-seller Hindenburg Research reports on Jan. 24 about the tycoon’s business empire Gautam Adani While there has been a reason why investors have pulled billions of dollars out of Indian markets, Michael Kelly, who oversees PineBridge’s $17.8 billion global multi-asset portfolio, is among those going the other way.

According to Kelly, who is also on PineBridge’s management committee, stock meltdowns have historically offered entry into an expensive market. His funds were not in Indian stocks before the debacle at Adani Securities, Kelly said, but have bought since, “we don’t necessarily have to.”

Corporate governance risks such as those highlighted Hindenburg not in existence emerging markets, Kelly said, noting the massive US corporate bankruptcies in 2001–2002 that were triggered by fraudulent accounting practices at WorldCom and Enron. It also does not discount the risk of further shocks to Indian markets as scrutiny of corporate governance increases.

Kelly said, “If you shine a spotlight, you’ll find things.” “You can never say there is only one cockroach. America had WorldCom and then there was another cockroach called Enron.” “Having said that, if you look at India, you will also see a lot of good companies.”

With MSCI’s India index down about 10% from its record high hit in December, some of these names have become more affordable, Kelly said, even though the gauge still trades at about 20 times forward earnings. doubles the benchmark’s ratio.

“There are companies trading at 90 times earnings with a large weighting in the global index, but you can also find things that aren’t as expensive and aren’t significant in the index,” he said.

Kelly’s bullishness is based on the belief that India, after several false starts, is finally poised to benefit from global multinationals’ willingness to diversify manufacturing away from China. companies including Apple Inc. And foxconn technology The company.. is expanding Indian operations, reacting to Sino-US tensions and harsh Covid policies that paralyzed the industry last year.

While India’s complex bureaucracy and poor infrastructure have caused many frustrated foreign companies to back out of their plans for India, Kelly said reforms in the banking sector and measures to streamline taxation are game-changers for foreign direct investment. Are. “Together China issues, we are again hearing people talking about giving India another try,” he said.

Kelly also likes Chinese stocks: India and China together account for “mid-teens” percent of his multi-asset portfolio, funded by selling US and European equities. But he sees India’s approach with the Chinese president as clear for now. Xi Jinping’s future policy is of particular concern following his crackdown on a number of areas, including private tutoring and gaming.

“In India, we think we can buy a three-four year growth picture at a reasonable price,” Kelly said. Will go back to Maoism.”