High valuations won't stop investors from buying Indian equities

India stands out as a compelling growth and transformation story, largely driven by infrastructure...Stefan Hofer MD & chief investment strategist at LGT Bank Asia

- Dipti Sharma

India stands out as a compelling growth and transformation story, largely driven by infrastructure, with GDP growth projected at 6.5% or higher in 2024 and 2025—one of the highest growth rates of any peer economy in the world, said Stefan Hofer, managing director and chief investment strategist at LGT Bank Asia. "So, we want to buy that growth."

Though, "the natural caution is the valuation," he warned. From the valuation standpoint, although India is not cheap, it is not cheap for a reason and that is the growth. More importantly, he believes that "although investors will take note of the high valuations, it won't stop them from buying Indian equities".

Edited excerpts:

To start, what is your investment strategy, particularly in light of Trump's re-election? Has it shifted in any way?

The US election is the most significant event of the year for global investors, sparking plenty of pre-election debate about positioning. However, with polls consistently proven wrong, the unexpected "Red Sweep"—Republicans taking the White House and Congress—was seen as the least likely outcome.

Before the election, we were bullish on US equities, especially technology and financials, and favored Indian and Japanese stocks. We were more cautious on China and Europe. Post-election, we didn't change our positioning, as the outcome actually reinforced our views.