Unlocking Long-Term Investment Potential in the Indian Subcontinent
In summary, the Indian Subcontinent offers a wealth of investment opportunities that remain ripe for exploration. The ongoing evolution of the region, characterised by regulatory improvements, technological advancements, growing foreign investment, a thriving startup ecosystem, and increased retail participation, has enhanced accessibility and liquidity in its capital markets, making it an enticing destination for long-term investments.
In the wake of our previous discussion, several savvy investors have reached out to inquire about our perspective on the promising long-term investment prospects in the Indian Subcontinent. We've outlined our insights in six key points:
Abundant Opportunities in an Expansive Landscape
The Indian Subcontinent boasts a vast and somewhat untamed investment landscape. With over 3,000 actively traded stocks in India alone, it's astonishing that relevant institutional coverage extends to just a fraction, covering less than 10% of this vast universe. This means that there are numerous under-the-radar gems among high-quality, robust, and leading businesses in the region.
A Quarter of the World's Potential
The Indian Subcontinent is now home to a quarter of the world's population. Despite this impressive demographic, poor infrastructure and limited access to essential products and services have given rise to widespread poverty and inequality. What makes this region distinctive is the presence of a substantial listed universe that includes family-owned businesses managed by experienced teams.
Stewardship and Vision
The long-term potential of an investment is often tied to the qualities of its stewards. In this region, you'll find leadership with rich histories of navigating challenging economic conditions. These management teams genuinely grasp the essence and values of their businesses.
Openness to Collaboration
Many businesses in the Subcontinent are family-owned and managed. With the new generation of family leaders stepping up, these enterprises are increasingly open to engaging with activist or suggestivist investors. This presents a unique opportunity to unlock and maximise shareholder value.
Progressive Political Landscape
While the Indian Subcontinent has a profound historical backdrop, its political systems are still in the process of evolution. Despite occasional disruptions, the region has consistently shown a commitment to democratic progress rather than a retreat from it.
Beyond India's Borders
Over the past decade, the investable universe has expanded significantly, with quality companies from Bangladesh and Sri Lanka entering the public domain. Pakistan is also emerging as a player in the equity market. Interestingly, the equity markets of each country in the Indian Subcontinent have exhibited low cross-correlation over the long term. This means investors may potentially benefit from diverse, uncorrelated drivers of return.
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