Mark Matthews from Julius Baer sees the hospitality sector as a bright spot. It is a key area in India’s growth story. He also favours India’s banking sector. This is due to economic growth factors.
Hospitality: The Next Big Bet
The hospitality sector looks very interesting in India. This is in addition to IT and banks. India has a rising middle class. This group will take more holidays. They also want to stay in nice hotels. Going to nice restaurants is also desired.
Banking Sector: Heart of the Economy
Banks remain a preferred pick. Matthews is selective within this sector. Banks are the heart of any economy. Indian banks should benefit from growth. Big tax cuts from the budget are expected. These will flow into the economy. The RBI also reversed credit caution. Interest rates were cut by 100 basis points. This occurred over five months. The festive season is upcoming. These factors support good economic growth. Banks serve as a proxy for this.
Emerging Markets: India’s Unique Position
Emerging markets have underperformed for years. They are under-owned globally. India is an exception to this trend. It performed well over the last decade. Domestic investors are actively participating. This makes India comparatively expensive. India trades at about 20 times price to earnings. Many other emerging markets are cheaper. Egypt, for instance, trades at four times. Dollar weakness helps emerging markets. Their currencies appear more stable. This stability attracts capital. Foreign flows into India have been negative. However, domestic investors are buying. The benchmark Nifty is flat this year.
Head of Research Asia Pacific, Julius Baer, Mark Matthews states, “Apart from IT and banks, the hospitality sector looks very interesting in India. With a rising middle class, intuitively people will take more holidays, want to stay in nice hotels, and go to nice restaurants.”
Guest’s idea:
Mark Matthews
Head of Research Asia Pacific
Julius Baer
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