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Don’t cash in on Modi mania yet, says AA-rated Linsey

Don’t cash in on Modi mania yet, says AA-rated Linsey

Investors should not cash in on India despite an election victory for Narendra Modi being largely priced in by markets, Citywire AA-rated manager Matt Linsey has said.

The London-based manager currently has 6.1% of his GAM Star North of South EM Equity fund invested in the country and, in his latest investor update, said he would not be closing out this position.

‘With the market now beginning to discount a sizeable Modi victory, there is a strong temptation to take profits,’ Linsey said.

‘We believe that there could still be considerable upside for the Indian market, should Modi implement his campaign promises, given the desperate need in India for more infrastructure development and a more streamlined bureaucracy.’

Linsey’s comments echo those of JP Morgan’s Rukhshad Shroff, who said a strong coalition government under Modi could help drive Indian growth.

On the ground

Linsey (pictured) previously backed India as the contrarian call of the year. Elsewhere in his update, he discussed his view of India on the ground following a recent research trip.

He said: ‘We noticed during our recent trip to the country that the rallies for Modi were much more enthusiastic than for Gandhi, again much more akin to a US Presidential election than an Indian parliamentary election.’

‘This strong belief that Modi will benefit the poor and bring real change and economic development to India now appears to be swaying a large number of voters.’

Linsey is the founder of global emerging markets boutique North of South Capital and has run the GAM Star North of South EM Equity fund on mandate since its launch in August 2011.

The largest exposure in the $53.6 million fund is currently Korea, which makes up 15.8% of the fund. This is ahead of China/Hong Kong, which accounts for 12% and Brazil, which makes up 11% of the fund’s geographic exposure.

The GAM Star North of South EM Equity Inst USD Acc has returned 7.1% over the 12 months to the end of March 2014. This compares to a fall of 1% by its Citywire benchmark, the MSCI EM (Emerging Markets) TR USD, over the same period.

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