As chief investment officer of HSBC Global Asset Management, Bill Maldoando oversees the company's investment strategies in the Asia Pacific region out of his Hong Kong office. Maldoando has been in the asset management industry since joiningHSBC in 1993 as a European derivative-based portfolio manager. An expert in Asian stock markets, Bill tellsET that he's bullish on Indian equities as current valuations of companies are very attractive. He believes equities are the best asset class for investment in 2013.
Which is the best asset class for investment in 2013?
If you look at global markets, there is strong upside for equities in 2013. For investors, equity investments are the best option compared to other alternatives like bonds, fixed deposits, etc.
What makes you so bullish on equities?
Investors should be brave at this point of time as there is very less risk of the global economy falling back into recession. The riskreward ratio is in favour of equities. Last year, a large amount of flows had come into fixed income, gold and real estate as people were scared of equities. Now, a small change of flows into equities has take markets higher.
Which sectors of the Indian stock markets do you find attractive?
Defensive stocks like consumer and health care are currently very expensive compared with banking and cyclical stocks like capital goods and metals. If defensives are expensive , they are no longer defensive. In terms of valuation, defensive stocks are 50% more expensive than cyclical stocks.
Recent quarterly earnings of India Inc were in line with expectations. Are you considering a ratings upgrade for Indian companies?
The worst of the earnings downgrades is behind us. Rather, we have seen more earnings upgrades over the recent past. We expect earnings for Indian companies to grow by around 15% in 2013. Moreover, one has to note that India has the lowest earnings volatility among any country in the world, including the US and China.
The Sensex gave a stellar 26% return in 2012. Do you believe valuations are still attractive after last year's sharp run-up?
Indian market valuations are looking very cheap compared to other regional markets. Given the kind of corporate profitability, Indian companies are trading at attractive valuations .