Nepean Capital's Gautam Trivedi Explains What's Driving Foreign Investors Out Of Asia
According to the co-founder of Nepean Capital, a total of $58 billion has been withdrawn from the Asian market by FPIs since July 2024.
The decline in foreign portfolio investment in India and other emerging economies is fuelled by a prolonged slowdown and a shift in investor focus towards the US market, according to Nepean Capital's Co-Founder and Managing Partner Gautam Trivedi.
Speaking to NDTV Profit, Trivedi mentioned that US President Donald Trump’s push for reciprocal tariffs and the Make America Great Again Programme has driven keen interest in the American market.
Explaining the reasons behind the FPI pullouts, Trivedi noted that the Indian economy has been facing a slowdown for the past few quarters, resulting in reduced investor interest.
"That’s not a full surprise (FPI pullout) to most market participants. The October-December quarter results have been pretty lacklustre. Slightly better than the previous quarter, but still pretty much lacklustre," he said.
Trivedi mentioned that while there have been some positive signs of recovery, the situation is far from ideal.
"The good news is, and again this is what I have seen in the few of the conferences I attended last week, is that rural consumption seems to be in much better shape than urban consumption. So at some point, urban consumption will bounce back," he said.
According to the co-founder of Nepean Capital, a total of $58 billion has been withdrawn from the Asian market by FPIs since July 2024.
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"Now that number ($58 billion) is ex-Japan and ex-China. So, it is a staggering number in itself. The other factor to keep in mind is where this money is going," Trivedi added.
Gautam Trivedi highlighted that while Indian and emerging markets are experiencing a slump, the US stock market has shown a bullish trend in recent months.
"So we pride ourselves here in India saying that we have 14 to 15% earnings growth on a rolling 12-month basis. But do you know that the earnings growth for the S&P 500 for this year's consensus is 13%?" he said.
"The fact is for this specific calendar year, the Magnificent Seven have an earnings growth of 18%. The balance of 493 companies has an average earnings growth of 11%. So, you see 2 successive years, 2023 and 2024, where the S&P 500 has given 20%+ returns. There is a very strong case for investing in the biggest emerging market today, which is the US, versus other EMs," he added.
Companies like Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Meta and Tesla form the Magnificent Seven in the US stock market.
With President Donald Trump's push for the MAGA program, investors sitting in the US will be more inclined to invest in the domestic market than look outside, according to Trivedi.
"I just have a hard time making a case to an asset allocator sitting in Chicago, New York City, Los Angeles, or Boston to allocate money to EMs/India because there is so much happening in their backyard," he said.
