China launches first India-dedicated investment fund

BEIJING: The Industrial and Commercial Bank of China, a top state-run Chinese bank has launched China's first India-dedicated publicly offered investment fund, urging the Chinese to invest heavily stating that the Indian economy is entering the "golden age of economic take-off".

The move, regarded as significant by observers to boost investments in India, comes just about a fortnight after the first ever informal summit between Prime Minister Narendra Modi and Chinese President Xi Jinping at Wuhan, where the two leaders sought to give a new direction to the bilateral ties to tap their economic potential.

The fund, named as the Industrial and Commercial Bank Credit Suisse India Market Fund, will "invest in exchange-traded funds listed on more than 20 exchanges in Europe and the US that are based on the Indian market."

It is China's first publicly offered fund for investing in India, state-run Global Times reported.

The fund will invest in the future of the Indian economy and track the distribution of the industrial structure across the Indian market, the report quoted a fund manager as saying.

The bank listed sectors for investments specifically, in terms of the major industries weighted distribution of the index.

The financial industry will account for the highest proportion, followed by information technology, alternative consumption, energy, essential consumption, raw materials, medicine, healthcare and other industries, it said.

The ICBC bank, the largest in the world with over $3.6 trillion in assets, has given an upbeat picture of India's economic growth path, while launching the fund.

According to the announcement of the offering, the ICBC Credit Suisse Indian Market Fund (LOF) will be available for sale at both the on-site and off-site markets from May 7 to May 25.

"Across the overseas market, India, as the second largest emerging market economy, is entering the golden age of economic take-off, and has become an area where international and domestic capitals are competing to pursue," a write-up on the ICBC's website said.

The fund opened the way for domestic investors and "provided a good tool for low-threshold investment in India," it said.

"Since 2017, the global economy has entered a recovery, and the relative advantages of emerging markets have gradually expanded, with India showing remarkable performance," it said.

India has become the second largest economy in emerging markets, ranking seventh in the GDP world, ranking second only to China and the US in purchasing power parity, and third in the world, it said.

The report said in the context of the ageing population of the world's major economies, India's low labour costs and abundant labour supply have attracted much attention, and the capital market has given high expectations for its economic growth, it said.

"The larger marginal improvement formed by various structural reforms led by Modi government is expected to unleash India's abundant demographic dividend," it said.

Quoting IMF projections stating that India's economy will continue to lead the global economy for a long time to come, it said "at the same time, the Indian rupee value stability, guarantee the security of the investment in India, India's stock markets risk/reward ratio is high and a low correlation with the A-shares," it said.

A write-up in the Global Times by the fund manager said "as the most important emerging market overseas, the Indian stock market's long-term trend must be positive. For Chinese investors, the current moment offers the best opportunity to get started in Indian stocks."

"The certainty of India's growth is very clear. But considering the continuous acceleration of urbanisation and the expansion of the middle class, India's future value will be large," it said.

If estimated by purchasing power parity, India's GDP is already close to seven per cent of the world. The situation is similar to China when it started to rise a decade ago, it said.

"Now, investing in the Indian market means an investor can enjoy double-digit economic growth," it said and added that the Indian stock market underwent a correction in the first quarter, which means it offers a good opportunity for opening positions. 

Recent research indicates that the Indian market has gradually become one of the best-performing markets in the world due to ongoing reforms, macroeconomic improvement and enhanced profitability, it said.

"Take March as an example. Due to trade friction between China and the US, foreign capital showed mostly net outflows from other Asian stock markets. However, India's capital inflows reached $2.1 billion, which was in sharp contrast to other markets in the region," it said.

"This shows that foreign investors recognise India's economic strength," it said.

Meanwhile, India is not affected by the trade friction between China and the US, and it has become a safe haven for funds. Chinese investors should pay close attention to the Indian stock market and seize new opportunities, it said.