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Data is the new oil

The Indian market was up in October. Carnegie Indienfond rose by a slight 0.03%.

The government implemented a reform last month that reduced corporation tax to 25%. This was very positively received as profits will increase by around eight percentage points from April 1 this year.

Speculation about further stimulus led the stock market to rise again in October. The government wants to privatise a number of companies that are currently under state ownership and control, which would require a strong stock market climate. Revenue from the sale of companies like Bharat Petroleum will be needed to offset the budget deficit caused by the lower taxation. We expect a more pragmatic stance from the government on reforms and the changes necessary to promote growth. Taxes paid by individuals and those on capital income may also be lowered.

Some news on two of the fund’s major holdings:

  • Bajaj Finance issued a strong report. Lending increased by 38%. There was some pressure on margins as interest income rose by 35%, but profit was up a full 63% and bad debt losses were under control. The company’s unique digital business model, with its own database for assessing customer creditworthiness, continues to gain market shares. Especially now that many poorly managed finance companies are struggling to resolve their borrowing. The share is up 52% this year.
  • Reliance Industries has agreed to sell 25% of its refinery operations to Saudi Aramco. The company is valued at USD 75 billion. This is another step on the road to reduce its exposure to oil and invest more in telecommunications and fibre networks. Owner Mukesh Ambani, who is also one of Asia’s richest men, has a new slogan: “Data is the new oil”. Reliance Jio which operates the company’s 4G network, today has 350 million subscribers and reaches 50 million households with its fibre network. By spinning off the telecom masts and fibre assets into a separate company, and then selling these assets to private equity, it will be able to achieve its target of being debt-free next year. The share is up 31% this year.

 

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Carnegie Indienfond offers exposure towards one of the world’s most exciting emerging markets. India has in the last decade established itself as a major economic power with extremely high growth. The...

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