We in the UK may be transfixed by Brexit, but out in the rest of the world there are numerous interesting developments for adventurous investors to keep a close eye on.
The key country to watch is India, especially now that Prime Minister Narendra Modi has been resoundingly re-elected. Although doubts about his reformist zeal have intensified over the last few years, Modi's BJP party has delivered on around 50 key reforms. It's worth highlighting real progress on rural electrification; a reform of how benefits are transferred to people; and significant investment in building toilets and new roads.
There's obviously lots still to do, not least in job creation for the young population, as well as in boosting low farm incomes. However, the political stability should help India become the world's third-largest economy by 2030. And if China becomes more of a "frenemy" than a friend to the Western world, then India could be on the receiving end of more foreign direct investment.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
With GDP growth averaging around 7%, and inflation rates stabilised below 5%, the scene is set for some of that "super- growth" the BJP has been promising foreign investors for some years now. Indian equities remain expensive though, and my hunch is that British investors need to tread with care in this complex and sometimes opaque market. My preference is for the actively managed funds in this sector, with four investment trusts topping my list: Aberdeen New India (LSE: ANII), Ashoka India (LSE: AIE), India Capital Growth (LSE: IGC) and JPMorgan Indian (LSE: JII). If you are determined to use an index tracker, maybe consider the Xtrackers Nifty 50 Swap Exchange-Traded Fund (LSE: XNIF).
Indonesia settles down
Another country that could benefit from big Asian trends is Indonesia. The return to power of Joko Widodo (Jokowi), with more than 55% of the vote, is a sign that this once volatile country is settling down. On paper, it should be a powerhouse of southeast Asia, with a huge population, abundant natural resources and a tradition of moderate religious observance. Nationalism, to date, hasn't been too strong a force. The president is also sensible, reform-minded and ecumenical in religious terms, although he has been pushed into supporting more conservative Islamic policies in recent years. His convincing re-election should be a big positive, although foreign investors had largely factored it in the Jakarta Composite index dropped 8% from its pre-election level, tracking the weakness in Asian equities and the recent soft economic data.
There's value in banks
That weakness is largely because Indonesia is facing its own domestic economic issues there's been a fall in exports growth, which coincided with the rise in oil prices. This has once again raised concerns over the current-account deficit (importing more than it exports), turning the rupiah into one of the worst-performing currencies in Asia.
However, Asian equities analysts at French bank Socit Gnrale reckon matters could improve, with the recent softness in the economic data to recede in the second half of this year, led by improved investment and consumption activity. "With Jokowi's return and the elections out of the way, we expect government spending to shift back to public investment." Socit Gnrale analysts are keen on local Indonesian banks, with price/earnings (p/e) ratios running at around 14. This represent good value, with 2019 earnings-per-share growth estimates remaining unperturbed at 14%. Banks constitute a large part of the local index, which is tracked by ETFs Xtrackers MSCI Indonesia (LSE: XMID) and HSBC MSCI Indonesia (LSE: HIDR).
-
8 of the best lakeside properties for saleThe best lakeside properties – from a house on the southeastern shore of Loch Lomond, to a 15th-century hall overlooking a lake in King’s Lynn, Norfolk
-
Gold’s allure and why you should never 'pay a premium for graded coins'It is easy to become distracted by the beauty of gold, but remember why you buy it, says Dominic Frisby
-
Shining a light on IndiaAdvertisement Feature Despite some short-term challenges, India remains very attractive for investors. Here’s why.
-
India’s economy has come a long way in 75 years, but where next?Briefings India has come a long way since independence to become the world's fifth-largest economy. But early mistakes and now a divisive leader are holding back the economy’s potential.
-
India: the next global growth engineNews India's stockmarket is booming, up by 37% so far this year, and the BSE Sensex index has delivered an annualised return over the last five years of more than twice that of the FTSE 100.
-
Forget China, here’s why you should invest in IndiaTips As China becomes increasingly hostile to investors, India, with a young, educated, tech-savvy population and a reform-minded government, is becoming an emerging-market favourite. Merryn Somerset Webb picks the best ways to invest.
-
How to profit from India’s high-tech recoveryTips Professional investor David Cornell of the India Capital Growth Fund, selects three of his favourite Indian stocks to buy now.
-
The five best ways to invest in India's promising futureCover Story The pandemic has been catastrophic for India, yet the stockmarket is hitting record highs. Investors are right to remain optimistic about the long term, but they are pricing all the good news in, says Cris Sholto Heaton
-
How will India’s Covid crisis affect the global economy?Analysis The wave of Covid infections sweeping through India has sparked a humanitarian crisis. But with India’s economy the fifth-biggest in the world, could it have bigger repercussions around the globe? Saloni Sardana investigates.
-
India’s pandemic turmoil hits emerging marketsNews India’s economy had been enjoying a strong recovery, driving optimistic forecasts for emerging markets. But then the latest wave of Covid-19 hit,
