Diversification! Think beyond Indian Markets

Indian economy is expected to record a sharp V shaped recovery as the business environment normalizes. Despite this, Indians should overcome the home country bias and ideally consider diversification of portfolio through investment opportunities in international markets. This will diversify the extant geopolitical risk associated with emerging economies, especially during periods of global/ regional financial crisis (i.e., East Asian crisis (96-97), 9/11 terror attacks and global financial crisis of 2008-09). So should form part of investor’s portfolio as part of as a prudent asset allocation and risk mitigation strategy

- Anupam Guha

Indian economy has witnessed above-average growth rate amongst the G-20 large economies, next only to China, over the last 20 years. This trend is expected to continue for the foreseeable future. According to IMF, Indian economy contributes about 3.3% to the global Gross Domestic Product, (GDP). Countries such as the USA and China contribute 23.6% and 15.5% to the global GDP, respectively.

It brings to fore a pertinent question in the minds of most investors, “Should we really be considering investments in overseas markets?” Clearly India presents decent broad-based opportunities for growth, as corporate profitability generally tracks the GDP growth and the stock prices follows suit.

While the question remains a pertinent one, Indian investors still have a lot to benefit by investing in overseas markets. Here is my take on a few important points which corroborate the need for investing in overseas markets.

An extensive array of investment opportunities

Whenever you think about the top brands in the world or brands of products and services you use on a daily basis, more often than not, you will think about Apple, Google, Facebook, Microsoft, Samsung, Amazon, Netflix and the likes of these. And you will notice that brands that feature mostly prominently in your list, are not listed on the Indian Stock Exchanges.