Investment Opportunities Abound Despite Global Crisis

By MICHEL W. POTTS indiawest.com February 26, 2009 03:01:00 PM

LOS ANGELES — As keynote speakers, Ravi Mantha and Sandeep Shrivastava each saw a silver lining of investment opportunities in the dark clouds of the global crisis when giving their presentations during a monthly meeting of The Indus Entrepreneurs Feb. 18 at the Sheraton hotel in Cerritos. Mantha is portfolio manager of global equities at Fidelity Investments, the nation's largest mutual fund company and a leading provider of financial services. Within Fidelity, Mantha is part of Pyramis Global Advisors, the institutional arm of Fidelity Investments. Shrivastava is the managing partner of Tenex Capital Fund in Seattle, Wash., an investment advisory focusing exclusively on Indian equity investments in technology, infrastructure, real estate, and retail sectors. He is also the current chairman of TiE's Seattle chapter. Speaking on the topic of "Contrarian Investing," Mantha contended that a majority of investing activity is simply "following the herd" and the way to succeed in the stock market is to begin thinking like investment mogul Warren Buffet, who is always on the lookout for a good deal. The Standard & Poor's 500 index is more than half a percent above the Treasury rate, "so it is really a fantastic time to be investing in stocks, if you're a long-term investor," Mantha reiterated to India-West. During the dot-com boom throughout the Clinton years, investors had come to expect a 15 percent or higher return on their investments. "Clearly, it was unrealistic," Mantha said. If we look at what should be the return, you should expect from U.S. equities for any reasonable time frame around nine percent to ten percent a year." Nevertheless, during those years, "that was when the herd instinct was kicking in, that the people were looking at the proliferation of new channels, talking about stocks and looking at these success stories, and they were just piling on the bandwagon without thinking about the fundamentals," he pointed out. Stocks, in his opinion, are just another asset. "There are times to buy and then there are times not be jumping in," he asserted. But these days, "the herd is selling stocks and, just looking at how much they have fallen, there's a lot of fear and panic in the market and everybody's running away," Mantha pointed out. However, "if you're a long-term investor, then the time to buy is when everyone else is selling, and the time to do that is now." Although no one can predict how the market will perform within the next six to 12 months, Mantha sets his investment horizon at 30 years. "It really depends on your retirement age, and I'm not saying anything that other financial advisors wouldn't say," he stated. Although by law he cannot make any specific recommendations or say what stocks investors should seriously consider buying at the moment, Mantha did concede that "overseas markets in general are exceedingly good value at the moment." While India has been affected by the global economic crisis in the past year, Shrivastava believes that what isolates the Indian economy from the rest of the world is based on the fact that the country's exports to the developed world is approximately 13 percent. To that extent, "if there is a slowdown in the developed world, unlike China and other parts of Asia, India will be less impacted by that," he told India-West in recounting what he told his audience at the TiE meeting. In looking ten to 20 years down the road, Shrivastava sees that India has several key advantages which are most likely to remain unchanged regardless of whatever course the global crisis takes. One of the keys is what he calls India's "demographic dividend." India has a working class population of approximately 700 million, "and if you project it out, it continues to grow over the next 15 years at least, meaning the working class population will grow to 825 million before it changes direction," he said. Meanwhile, infrastructure investment opportunity in India is still the highest compared to anywhere in the world, since India plans to spend more than $500 million over the next five years on its infrastructure through a combination of foreign and internal capital. At the moment, India has a ten percent power deficit, "and its needs are likely to grow by 30 percent a year for the next five years, so power investment is a big part of the infrastructure investment opportunity," Shrivastava maintained. A third advantage is consumption. India's large population "currently consumes significantly a low percentage versus the rest of the world, so its index is much lower," he pointed out. "So I would say the consumption opportunity right from consumer goods all the way to luxury items will only grow upwards while the rest of the world tapers out." All three advantages will spell growth for India in the next 25 years. "From our vantage point, if you add up the investment opportunity as a result of these three growth areas, you're looking at an average six to seven percent annual GDP growth in India," he contended.