According to Dasani, India had two very strong years of outperformance in 2023 and 2024. Back then, the bigger EMs of Asia such as China and Korea were not performing very well. “India’s earnings growth was very strong coming out of COVID-19 and there was lot of buoyancy on strong economic growth.”
In contrast, there were some policy-related issues in China back then, as their private sector was not being favored by the Chinese government and for them, their national security was top priority. ”However, those things started to change in the fourth quarter of 2024,” he claimed.
With that change, two things happened. ”AI-related semiconductor value chain, which is very predominant in Korea and Taiwan, started to perform as globally, investors realised that the entire AI value chain is located in Asia, especially in Korea and Taiwan,” explained Dasani.
Secondly, in China, the economic growth was prioritised. The cumulative efforts of stabilising the real estate sector and improving consumption driven by several subsidy programs, started to work for the market.
“A combination of these reasons led to non-India EMs doing well this year. Some of the valuation gap has been bridged. Relative valuations of India are more reasonable today than they were 12 months ago. The argument that India is more expensive than other EMs is no longer valid,” he said.
