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Indian stock markets seen giving better returns than China
Friday, 10 October 2003, 19:30 IST
NEW YORK: China's economic growth and vast domestic market have made it a top destination for foreign direct investment but India may offer a better deal when it comes to stork markets, according to a study report.
Indian companies not only enjoyed better trading volumes but also offered a better return on equity, reported The Wall Street Journal referring to a study conducted by CLSA Emerging Markets.
The study, which surveyed 61 Chinese companies trading in Hong Kong and 69 Indian companies listed in the country's financial hub Mumbai, predicted that Indian companies should do well in 2004.
Quoting Damian Kestel, a member of the CLSA team that conducted the study, the financial daily said while everyone talked about China, India offered a better shareholder value.
The Indian companies also look to make more money and not just gain market share, he said. The study also highlighted the contrasting approaches of New Delhi and Beijing in implementing policy decisions.
India has been slower in opening up, but in the process, it has developed world-class companies. China, on the other hand, has had an export driven manufacturing growth that has, in turn, generated a rising tide for foreign investment.
The report said while multinationals had been eager to make big investments in China and continue to view the market opportunity there as unparalleled, India has managed to create companies that can compete on a global scale with management practices similar to that in the U.S.
The Indian companies mentioned in this regard included Infosys Technologies, Wipro, Ranbaxy Laboratories and a number of other business process outsourcing firms.
The story said in the category of stocks with a market capitalisation of over $2 billion, the return on equity from Indian companies was 30 percent as compared to 17 percent from their Chinese counterparts.
And in earnings per share, while Indian companies managed 16 percent it was a decline of three percent for the Chinese.
The report listed better disclosure norms, stronger property rights, an investor-friendly legal system, and an advanced banking system as other major positives for the Indian markets.
The study, however, noted that for companies with market capitalisation of under $1 billion, it was a "pretty even race," in terms of shareholder value, with Chinese companies looking more attractive.
The study also pointed out that China had more to offer in terms of new, potentially attractive listings.
Source: IANS
Source: IANS