India a top growth market but still underowned globally: Matt Orton
"There are a lot of companies who are actively involved in this, but L&T is one of the names I have been looking at deeper, just given an incredibly clean balance sheet, but they have not only exposure to Indian infrastructure but also infrastructure in the GCC where there is a tremendous amount of capex and development and hydrocarbons, ports, all of that. So that is a really-really interesting play right now," says
Matt Orton
,
Raymond James Investment
.
What brings you to India?
Matt Orton:
So, I am here for an investor conference with
Bank of America
. So, as we have talked a lot about India being one of my favourite regions. So, there is a lot of interesting companies that we look at, invest in, and so being able to speak with management teams in person, ask a lot of the questions you need, finding new ideas, I think that is all a critical part of the investment process. And so, it is wonderful to be able to do that in person and then share and talk about ideas with other investors as well.
Is it your first India trip?
Matt Orton:
So, this is my second time in Mumbai.
When was the last one?
Matt Orton: Last year. So, I was here for the elections which was quite an exciting time to be here.
But I bet visibly you must have seen a lot of infra development. I mean, that is something that you cannot miss if you visit Mumbai even a year after. Any infra companies which are part of your portfolio or you are scouting for?
Matt Orton:
Absolutely. So, the infrastructure story is incredibly exciting. You come here and see the coastal highway between last year and this year just the tunnel being opened, being able to get from where we are in South Mumbai over to here this morning, it is amazing. So, there are a lot of companies who are actively involved in this, but L&T is one of the names I have been looking at deeper, just given an incredibly clean balance sheet, but they have not only exposure to Indian infrastructure but also infrastructure in the GCC where there is a tremendous amount of capex and development and hydrocarbons, ports, all of that. So that is a really-really interesting play right now.
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We had Ridham Desai from Morgan Stanley before you came in and he is like okay India everybody knows, everybody loves, but hardly anybody owns it. Is that true from a global perspective that India is a great market to go, but in terms of commitment levels they are minuscule?
Matt Orton:
It is true. There is a couple of things that are at play. India is a more challenging market to invest in as an overseas investor. You have to be very committed to open up trading licenses. There is definitely passive ways you can play it by some of the ETFs, but there are not as many active options.
So, I think as an investor, that is what makes it more exciting because you do not have a tonne of foreign flows going into these companies, there is more room for these ideas to play out.
But in conversations with clients, especially as clients are finally starting to look overseas as opposed to the US being the only option as you see good returns coming from the rest of the world, there is a very real openness to finding new markets and other long-term growth opportunities.
And so, India is certainly one that is very exciting and is a standout relative to say Europe where there is some very-very interesting opportunities there, but there is not the same growth story. We are looking at the fourth largest economy, soon to be third largest economy in the world, that is a tremendous pool of really-really compelling investments. So, for the long term, you have such growth with the market that I would argue is still underpenetrated from an investment perspective.
So, country-wise, which is your largest exposure or region?
Matt Orton:
So, the US is my largest region right now. I think that the earning story continues to play out. The US market continues to scale this wall of worry. It has been one of the most hated rallies I can remember. But when you look at the fundamentals, the fundamentals are working. Corporate America is working. A lot of the long-term secular growth themes like artificial intelligence, changes to consumer habits, those are all compelling ideas where you are seeing compounding returns in the US. But you look to a market like India as well, a lot of those same themes are playing out and they are embedded even in stories of financial companies, auto companies. So, there is a lot of ways you can play this and that is what I try and do is find these long-term growth themes and how does that fit into different companies around the world.
But you do not think there would be a tariff hit back and that is going to stall the growth in US?
Matt Orton:
So, tariffs are going to hit growth in some way shape or form but a lot of that is already baked into the market. So, you had that vicious selloff after Liberation Day in the US and investors realise that is certainly the ceiling to where tariffs go.
Trump was elected talking about 10-15% tariffs, that is essentially where we have settled right now in the US. So, there is going to be ups and downs as we negotiate these trade deals. But hopefully, as you start to see some of them come to the table and you get through that volatility, the market will have recalibrated by that point and it will become fundamentally driven again and we saw what that could look like during earning season.
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