abrdn New India Investment Trust PLC said on Thursday its first-half net asset value increased in part due to economic growth in India and the increasing sophistication of Indian corporations.
The London-based, India-focused investor said its net asset value per share increased by 19% in the six months to the end of September to 972.34 pence from 819.56 pence at the end of the last financial year in March.
The company said it also outperformed the benchmark MSCI India Index, which rose by 11.6% in total return terms.
abrdn New India said the country continues to present ‘compelling attractions for investors’ and said its portfolio can continue to ‘profit from pricing power at each stage of the economic cycle’.
It said the real estate sector, where the portfolio has significant exposure compared to the benchmark, was a top performer as Indian residential property sales continue their recovery.
The company said investing in India requires an acceptance of risk and market volatility, noting risk from a spike in global energy prices with India a net oil importer. It said while geopolitics is a concern, India has a ‘comparatively robust’ international standing and is ‘more insulated from global macroeconomic concerns due to its growing domestic economy’.
It also said there was concern that valuations of Indian companies are high, which it said had been reflected in recent falls in the market. abrdn New India said the manager is ‘optimistic’ that the valuations are supported by strong earnings growth.
The company also said it had ‘regrettably’ been impacted by an increase in capital gains tax by the Indian government in July. For long-term investments the rate increased to 12.5% from 10% and to 20% from 15% for short-term investments.
Indian capital gains tax paid on sales multiplied to £6.6 million in the first half from £2.0 million year-on-year. This also surpassed the £5.1 million total capital gains tax paid in the entire last financial year.
Chair Michael Hughes said: ‘India continues to shine as one of the brighter spots in the Asia-Pacific region...The stock market has also been performing exceptionally well, ranking among the best-performing emerging markets in recent quarters...Corporate India is in good shape, with good growth prospects, healthy balance sheets, low debt, and competent management teams, justifying the prevailing stock prices of high-quality companies including those held in your company’s portfolio.’
Shares in abrdn New India were down 1.0% to 792 pence in London on Thursday morning.
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