Consumer financing boom in India has peaked: Chris Wood
Lender says it would renew the process to sell broking business.
By ET Bureau |
MUMBAI: Christopher Wood, global head of equity strategy at Jefferies, has cautioned that the “consumer financing boom” in India has peaked after private sector lender HDFC Bank reported a slowdown in loan growth in the June quarter
“The results led to 3.3% decline in HDFC Bank’s share price on Monday and should be seen as further confirmation that the consumer financing boom in India in recent years has peaked, for now, in part as a result of the ongoing fallout in the NBFC sector triggered almost a year ago by the default of triple-A rated IL&FS,” said Wood in his weekly newsletter named 'Greed & Fear'.
Loan growth of HDFC Bank slowed to 17.1% at the end of June quarter versus 24.5% at the end of the March quarter.
However, despite the cyclical risks, Wood has retained HDFC Bank in his Asia ex-Japan longonly portfolio, as it is India’s quality private sector consumer lender.
The former chief equity strategist of CLSA has replaced Arvind Fashions with SBI Life Insurance Company in the portfolio, saying that it makes sense to reduce the beta on some other consumer-related exposure.
The Asia ex-Japan thematic equity portfolio for long-only absolute-return investors at Jefferies has a 15% weightage on Indian private sector banks — 5% weightage each for HDFC Bank, ICICI Bank and ICICI Bank.
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S BI Life Insurance has a 4% weightage, while Bajaj Finance represents the Indian non-banking finance space in the portfolio with a 5% weightage. Housing Development Finance Corporation and Gruh Finance are also part of the portfolio with a 5% weightage each.
Wood is playing the India internet theme in his portfolio with a 5% weightage. Dalmia Bharat and Godrej Properties are also part of this portfolio.
Christopher Wood has a bullish view on Indian markets. In his first media interview after joining Jefferies last month, Wood has told ET that India is one of his top bets within the emerging markets as the country is less exposed to the trade war issues compared to other markets. The strategist also said that the re-election of the coalition led by Prime Minister Narendra Modi is constructive for Indian markets.
