February 13, 2018
Although they have softened a little since in unusually turbulent international markets, shares on the BSE rose immediately before the Union Budget Statement on 1st February, the last full Federal Budget before the General Election next year and the surest possible indication that markets were expecting Prime Minister Modi’s Government to continue with its current economic programme for the rest of its term (perhaps with an added fillip for the rural population).
Investors also seemed to be expecting a widening of the fiscal deficit for the year ahead, particularly in the light of increased Government investment in infrastructure programmes, including that new rural infrastructure investment in particular. Indeed, a recent poll conducted by Reuters found that most economists in the sector are expecting a deficit of around 3.2% of GDP as against current official government forecasts of 3%. So both sets of projects are broadly in line with overall market expectations and that should help keep the equity markets stable, or at least as stable as they can be in the current choppy waters of global finance.
Meanwhile, over on the brand new REIT market on BSE, which is still gathering pace in line with India’s continued economic resurgence in commercial and domestic real estate markets, Embassy Group (an Indian partner of Blackstone) is presently laying the groundwork for its first REIT public issue which has real potential to open up a market platform already attracting billions of dollars of investment overseas. Michael Holland, CEO of Embassy, confirmed at the end of January that the company expects to issue a draft prospectus by June as a precursor to a full listing a month or so later. If successful the issue could prove to be a key footprint to unlocking a valuable source of additional capital for real estate developers on the subcontinent: the Embassy listing alone may be for as much as $ 1 Billion according to some commentators and the global REIT market is currently estimated to be worth as much as $1.7 Trillion.
And with blue chip tenants among its portfolio, including the likes of Microsoft and IBM, it seems certainly unlikely that the Embassy Listing will fail to generate significant investor appetite, so it ought to be good news for the real estate sector all round.
Ever since Red Ribbon Fund Management was founded, India has been at the very heart of everything it does because, put simply, India is the most important Growth Market on the Planet. Set to overtake China by becoming the world’s most populous country by 2022, the subcontinent’s increasingly urbanised and sophisticated population has powered a consumer led and technology driven revolution that is nothing short of an economic miracle. That’s why at Red Ribbon we believe that no investment portfolio can be considered properly balanced unless at least 10% of its holdings are in Growth Market Projects, and in Indian Projects in particular.
Because it isn’t the fastest growing large economy on the planet for nothing…