Chris Wooden raises weight of Bajaj Finance in his Asia ex-Japan portfolio

NEW DELHI: Barely a fortnight after including to his Asia ex-Japan lengthy solely portfolio, Christopher Wooden, International Head of Equities at Jefferies, has elevated the burden of the non-banking monetary firm by one proportion level.

With this, the burden of Bajaj Finance stands at 5 per cent in his portfolio now. Wooden additionally added 1 proportion level weight to Aea Restricted, a tech conglomerate headquartered in Singapore. Concurrently, he minimize the burden of Taiwan’s MediaTek and Korea’s Samsung Electronics by 1 proportion level every.

Indian shares now have the most important 36 per cent weight within the portfolio. That is greater than the mixed weight of China and Taiwan. Different territories included within the portfolio are Korea, Australia, Hong Kong and Singapore.

Evergrande not Lehman second
Wooden argues that the Evergrande disaster in China isn’t a Lehman second however simply an acute part of the liquidity disaster that an actual property firm is going through.

“This isn’t a spontaneous disaster. Moderately Evergrande’s acute liquidity disaster, signaled by the 86 per cent collapse in its share value since late February, has been virtually inevitable ever since China launched its “three pink traces” coverage in August 2020 asking chosen property builders to adapt to particular monetary ratios,” mentioned Wooden in his weekly GREED & worry report.

Evergrande has complete liabilities of $305bn, which the corporate is discovering it troublesome to service. It has already defaulted on one curiosity cost, and it’s prone to default on one other. Wooden assumes the authorities are ready to deal with the fallout in what would quantity to a managed liquidation. Nevertheless, why debt funds nonetheless personal its papers surprises him.

“For such causes it’s wonderful that main debt funds nonetheless seem to personal Evergrande paper, although that most likely has one thing to do with the perverse logic of indexing. On the earth of fastened earnings, the extra debt an issuer has the extra possible it’s to be included in an index,” he mentioned.

Evergrande’s debt presently has a 1.5 per cent weighting within the Bloomberg Asia USD Excessive-Yield Diversified Credit score Index, with different Chinese language builders accounting for 27.6 per cent of the index.

Indian actual property on a special path
Whereas the Chinese language actual property corporations are falling out of favor, the story in India is completely completely different. Indian property shares hit their highest degree since 2010 this week.

“The structural bull story stays in place with rising proof {that a} new residential property cycle has commenced after a seven-year downturn regardless of the setback triggered by the Delta wave,” mentioned Wooden.

Wooden has allotted 17 per cent to the true property sector within the Indian long-only portfolio.

The celebrated fund supervisor underlined that there are extra tailwinds to India’s story. IT corporations are hiring extra and a broader based mostly personal sector-driven capital spending cycle, extending past the property sector, is now regarded as solely a 12 months away.

“India additionally appears to be at a serious inflection level in earnings with the company income to GDP ratio bouncing off an all-time low of 1.2 per cent in FY20 to an estimated 2.1 per cent in FY21,” he added.