Growth potential is top class in the world, leading investment in India with India ADR and India ETF
The Indian economy has continued to grow sustainably in recent years, and India has the potential to become an economic superpower comparable to China in the future. We will introduce how to invest in the growing Indian market, which is attracting the attention of economists and business people.
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1 India's economic growth rate surpassing that of China and the increase in the ratio of the working-age population are tailwinds
What can you tell about the growth of the Indian economy?
Comparing GDP growth with major economies such as the US, China, and Japan shows India's high economic growth rate. In recent years, India has surpassed China, which has boasted a top-class economic growth rate among economic powers. You can visually confirm the high growth potential of the Indian economy in recent years by looking at the chart of "India SENSEX", a stock index representing the Indian stock market.
Due to rapid economic growth since the 1990s, China has become one of the world's top economic powers. Similarly, India has achieved economic growth after China since the 1990s.
India's high growth potential is supported by a population of approximately 1.38 billion, which is more than 10 times that of Japan and the second largest in the world, and 3.28 million square kilometers, which is less than 10 times that of Japan. (all from the Ministry of Foreign Affairs "India/basic data"), and the prosperity of the service industry including the IT industry.
In fact, India's GDP has maintained positive growth, except for 2020 when it was affected by the corona shock, and in recent years it has surpassed China's growth rate.
Comparing India's real GDP in 2021 with that of China, GDP in the first quarter was 1.6% year-on-year, 20.1% in the second quarter, and 8.4% in the third quarter. China's GDP for the same period was 18.3%, 7.9%, and 4.9%, so it can be seen that India's growth rate exceeded that of China, although there was a gap in the timing of recovery.
The Indian SENSEX index chart provides a visual confirmation of India's economic growth over the last 10 years.
The India SENSEX Index, also known as the SENSEN30, consists of the top 30 Indian stocks listed on the Bombay Stock Exchange, representing the Indian stock market. India SENSEX selects 30 stocks based on market capitalization, liquidity, industry, etc., and calculates the market capitalization weighted average of all constituent stocks.
The following shows the chart (monthly) of the Indian SENSEX for the last 10 years. Together with the chart of the Dow Jones Industrial Average, which is an index of the world's stock market, and the Hong Kong Hang Seng Index, a representative stock index of China, which is competing with each other in terms of economic growth rate, we can check the trend and rate of increase of the index over the past 10 years. Let's look at.
(Image = Monex Securities investment information "SENSEX30 Chart")Assuming that the index ten years ago was 0 for each of the three stock indices, India will have the highest rate of increase as of January 2022. It's SENSEX.
The NY Dow Average is a stock index that is widely known among investors who invest in foreign stocks, but the Indian SENSEX has exceeded the rate of increase of this NY Dow Average by about 31.6%.
Among Chinese stocks, Hong Kong stocks are attracting the attention of foreign stock investors next to US stocks due to their ease of trading. The index increase rate of the Hong Kong Hang Seng Index, which is a representative stock index of Hong Kong stocks, is far behind India's SENSEX and the NY Dow Jones Industrial Average.
As far as the last 10 years are concerned, the high growth rate of the Indian SENSEX index indicates the high growth potential of the Indian economy and the attractiveness of the Indian stock market as an investment target.
As a basis for thinking that the Indian economy will continue to grow in the future, we must also mention India's high working-age population ratio.
The working-age population is the population that falls under the age group of 15 to 64 years old out of the total population. On the other hand, the working-age population ratio means the ratio of the working-age population to the total population.
As of 2020, India's working-age population ratio is 67.3% (from World Bank statistics).
Considering that Japan's working-age population ratio as of 2020 is 59.2% (from World Bank statistics), the working-age population (= substantial workers who support the Indian economy) out of the total population of India. You can see how high the percentage of
By the way, the ratio of the working-age population in China, which has already begun to decline, is 70.3% (2020, World Bank statistics). It is only a matter of time before India, whose ratio of working-age population is rising, will overtake China, which is on a downward trend.
2 How to invest in Indian stocks
Is it possible to buy individual Indian stocks through a Japanese securities company like US stocks?
Individual stocks of Indian nationality listed on Indian stock exchanges cannot be directly traded from major domestic securities companies, including online securities companies. However, ADRs (a type of U.S. stocks) issued by Indian companies, Indian ETFs belonging to U.S. and Hong Kong stocks, and investment trusts that invest in India can be easily purchased at Japanese securities companies.
Just looking at the strong economic growth rate and rising working-age population ratio alone, we can see India as a market with a lot of room for growth, a market worthy of investment.
However, there are no domestic securities companies that handle Indian stocks listed on the Indian stock exchange. You have to invest in a way.
- ADRs (American Depository Receipts)
- ETF
- Mutual Funds
- CFDs
Let's briefly explain how to invest below.
As of January 2022, there are no securities companies in Japan that directly handle Indian stocks. If an investor residing in Japan were to purchase Indian stocks in person, he or she would have to find a local securities company, open an account, collect investment information written in the local language, and do so on their own. I have to trade. Therefore, it is not realistic to trade Indian stocks directly.
On the other hand, if you have an ADR issued by the Indian government or an Indian company and listed on a US stock exchange, if you have an account at a domestic securities company that handles US stocks, can be easily purchased by anyone.
ADR is the closest method to investing in common stocks, and it can be said that it is a way to directly invest in Indian government agencies and Indian companies from within Japan.
ADR is an abbreviation of "American Depositary Receipt" and is called "American Depositary Receipt" in Japanese. It is a certificate that shows the ownership of securities issued by a non-U.S. company or government, or an overseas subsidiary of a U.S. company. .
An ETF composed of stocks related to India is another way to invest in the Indian stock market.
"Exchange Traded Fund", the official name in Japanese is "Stock Index Linked Exchange Traded Fund", a type of investment trust called "ETF" in Japan. Like general listed individual stocks, they are traded on exchanges through securities companies, so they have advantages such as high liquidity and price transparency. At the same time, it is a major feature that it has both the product characteristics and merits of an investment trust. All ETFs are calculated and managed to track the performance of a specific stock index, so a portfolio similar to the constituent stocks of the target stock index is constructed.
For domestic ETFs, all issues are listed on the Tokyo Stock Exchange. Regardless of whether the fund is established and managed by a domestic or foreign asset management company, investors residing in Japan can trade using any securities company in the same way as domestic common stocks.
Overseas ETFs include US ETFs and Chinese ETFs, and ETFs of foreign stocks handled by domestic securities companies can be traded in a foreign stock trading account in the same way as the target foreign stocks. .
All ETFs are designed to track the performance of stock indices that invest in India, so buying and holding one Indian ETF is equivalent to investing in the Indian stock market. have the same meaning as
The method of using Indian ETFs among Indian stock investments is the most familiar investment method for investors who have accounts at domestic securities companies. Here's a quick rundown of the main benefits of investing in ETFs.
ETF, as its official name is "listed investment trust linked to stock index", is a kind of investment trust. Therefore, just like mutual funds, the biggest feature is that you can automatically enjoy the diversified investment effect even if you just own one ETF issue.
Investment trusts and ETFs are financial products that employ a method of investing in multiple stocks that make up a reference stock index at the same time, that is, a method called "diversified investment".
In order to conduct effective diversified investment with only individual stocks, investors themselves need to collect sufficient investment information and appropriately select stocks and analyze stocks.
However, busy part-time investors such as business people in their 30s and 40s cannot secure enough time to gather information and analyze individual stocks, so they choose a portfolio with a high risk minimization effect. Composing your own is extremely difficult.
Using investment trusts and ETFs as a countermeasure to overcome this situation is a very simple method because it can automatically diversify investments while saving time and effort.
The basics of investment management is "diversified investment".
There is a famous investment adage, "Don't put all your eggs in one basket." This proverb is based on the teaching that ``concentration of assets in one place carries the risk of incurring a huge loss'' and ``investing assets by diversifying them into multiple financial products can minimize the assumed risks''. to tell home.
Diversified investment is an investment method that embodies the basic stance of managing investments while protecting important assets.
In the case of the Japanese stock market, trading of individual stocks is, in principle, made in units of one share (100 shares). On the other hand, since one unit is the trading unit for both domestic and overseas ETFs (with the exception of some issues), you can invest a considerably smaller amount compared to individual issues.
Even the most expensive domestic ETFs are priced at around 50,000 to 60,000 yen per share, or from several thousand yen to around 10,000 yen, so anyone can buy them regardless of their surplus funds. The charm is that it is easy.
There is only one Indian-related ETF listed on the Tokyo Stock Exchange, "NEXT FUNDS Indian Stock Index Nifty 50 ETF" <1678> As of January 7th, the minimum investment amount is 24,690 yen.
Overseas ETFs are managed in foreign currencies such as US dollars and Hong Kong dollars, but for Indian-related stocks, the price per unit is often less than US$50 (less than ¥6,000, assuming US$1 = ¥115). Mostly.
The funds allocated for investment must be surplus funds. ETFs, which allow for small investments of a few thousand yen, are easy to use because the number of investment units can be freely adjusted according to the financial strength of each person.
You can also invest in investment trusts established and managed by various asset management companies in Japan and overseas, especially in funds that have a portfolio of Indian-related stocks.
In addition to stock index-linked funds, investment trusts include funds composed of stocks selected according to the unique criteria of asset management companies and fund managers, so a large number of stocks is a major feature. It is
For investment trusts that can be traded in Japan, regardless of the asset management company, the standard price is displayed in yen, and if you have a general securities account, you can buy in yen, so you can easily invest in Indian stocks.
A mutual fund is a financial product that diversifies and invests in multiple stocks and bonds. Based on the results of research and analysis by experts and investment policies for each stock, we collect small amounts of money collected from many investors and manage them in individual funds. The performance of investment trusts is distributed according to the investor's investment amount. Fundamental product design is the same for mutual funds and ETFs, and like ETFs, diversification and small-scale investment are major advantages of mutual funds. Since investment trusts are unlisted, the investment management company recalculates the orders collected through securities companies, not stock exchange transactions, every business day at night and announces the base price.
CFDs, which are unfamiliar to beginners and intermediate investors, are also one of the financial products that can invest in Indian stocks. With CFDs, you can trade stock index futures with Indian stocks as underlying assets.
However, only a limited number of securities companies handle stock index futures CFDs related to Indian stocks (only GMO Click Securities is a major online securities company).
CFD is an abbreviation of "Contract for Difference" and is a type of financial product that means "difference settlement transaction" in Japanese. It is characterized by settling only the difference caused by the opposite trade between "buy" and "sell". As there is no physical delivery, it is suitable for trading stock indices, ETFs, foreign exchange, or commodities or commodity futures that are difficult to deliver, such as crude oil, precious metals, and flour. By increasing the total transaction amount by applying leverage to these underlying assets, it is a mechanism to obtain a large profit (difference).
3 How to buy Indian ADRs, overseas ETFs, and investment trusts at Japanese securities companies
It is possible to purchase Indian stock-related products at Japanese securities companies, but the actual purchase Please tell me the flow.
If you have an account with a securities company, you can immediately purchase an investment trust. ADRs and Indian ETFs are relatives of foreign stocks, so you will need to open a foreign stock trading account. After opening a foreign stock trading account, deposit the necessary funds for trading. Once you have deposited funds, you will be able to buy and sell ADRs and Indian ETFs.
There are four ways to invest in India-related stocks from Japan: ADR, ETFs, mutual funds, and CFDs. Among them, CFD is based on leveraged trading (depositing margin and trading many times larger than the margin), so if your risk tolerance is low, it would be better to avoid it.
For those who are interested in investing in Indian stocks, but who have decided how to use their investment assets, or who do not want to reduce their investment assets, there are three methods to choose from: Indian ADR, overseas ETFs, and investment trusts. it's recommended.
Domestic ETFs and investment trusts are managed in yen, so you can trade using yen funds in your brokerage account. *There is only one domestic ETF related to Indian stocks listed on the Tokyo Stock Exchange: NEXT FUNDS Indian Stock Index Nifty50 Exchange Traded Fund <1678>.
On the other hand, ADRs are denominated in US dollars and overseas ETFs are denominated in local currencies, so when domestic investors purchase products, they have to decide for themselves whether to settle in yen or in foreign currencies. I have.
Here, assuming that you have a comprehensive securities account with SBI SECURITIES, we will explain how to buy Indian ADRs and overseas ETFs for each settlement currency, citing actual trading screens.
The Indian ADRs handled by SBI SECURITIES are a type of US stocks listed on the New York Stock Exchange or NASDAQ. In order to invest in Indian ADR, it is necessary to open a "foreign stock trading account" that can trade US stocks.
* Foreign stock trading account opening fees and account management fees are free.
1 To open a foreign stock trading account, click the "Open" button of "Foreign stocks" in the account opening status confirmation column on the right side of the login screen.
(Image = quoted from SBI Securities)2 When the screen changes and the following button appears, click it.
(Image = quoted from SBI SECURITIES)3 You will be taken to the foreign stock trading account opening application procedure screen. After entering the necessary information, confirm the entered content and send it.
4 After completing the account opening application procedure, a foreign stock trading account will be opened.
In order to purchase ADRs and overseas ETFs, it is necessary to deposit purchase funds in advance.
At SBI SECURITIES, all target issues can be settled in yen or foreign currencies (US dollars or Hong Kong dollars for investment in Indian stocks), so the deposit method will be decided according to the exchange environment and the status of the funds held.
If you have a sufficient balance (purchasing capacity) in your general securities account, it will be reflected in the purchasing capacity of your foreign stock trading account, and you will be able to purchase foreign stocks immediately.
Select the most convenient method from the following methods for depositing funds into the securities general account.
3 Bank automatic withdrawal service (application required)
ADRs issued by the Indian government or Indian companies are effectively the same as US stocks. The ETFs related to Indian stocks that can be purchased at SBI SECURITIES are either US stocks, Hong Kong stocks, or Singapore stocks. When choosing foreign currency deposit, select the foreign currency according to the brand to be purchased and process the deposit.
There are two ways to deposit foreign currency.
1 Deposit foreign currency from SBI Hybrid Deposit
If you have a foreign currency or foreign currency-denominated MMF in your SBI Sumishin Net Bank foreign currency account, specify the transfer amount on the SBI SECURITIES foreign currency deposit screen, and the foreign currency will immediately be transferred to your SBI SECURITIES foreign stock trading account. You can deposit money.
There is no foreign currency deposit fee from SBI Sumishin Net Bank.
After logging in to the SBI SECURITIES site, select the "Deposit/Withdrawal/Transfer" menu from the menu bar at the top of the screen. ↓↓When the following screen appears, select the "Foreign Currency Deposit" menu from the "Foreign Currency Deposit/Withdrawal" on the left side of the screen. ↓↓ "Sumishin SBI Net Bank 'Foreign Currency Deposit' Immediate Transfer Service/Transfer Instructions" will be displayed.
(Image = quoted from SBI SECURITIES)After entering the "transfer amount" and SBI SECURITIES' "transaction password" on the transfer instruction screen, click the "Confirm transfer instruction" button.
*The foreign currency account of SBI Sumishin Net Bank does not support Singapore dollars. When purchasing products denominated in Singapore dollars, please select yen settlement. ↓↓The “Transfer Instruction Confirmation” screen will be displayed.
(Image = quoted from SBI SECURITIES)Check the details of the transfer and click the "Transfer Instruction" button. ↓↓Sumishin SBI Net Bank's "Immediate Payment Login Service" screen will be displayed.
Once you log in to the bank site, follow the on-screen instructions to proceed with the transfer procedure and complete the foreign currency deposit to your SBI SECURITIES foreign stock trading account.
2 Perform "foreign exchange trading" with SBI SECURITIES' foreign stock trading account
If you do not have foreign currency in your SBI Sumishin Net Bank foreign currency account, you can exchange the required amount on SBI SECURITIES' foreign stock trading site from the purchasing capacity of SBI SECURITIES' comprehensive securities account.
Foreign exchange fees for each currency are included in the exchange spread. As of January 9, 2022, at SBI SECURITIES, the currency exchange spread (one-way) for investments in Indian stocks is 0.25 yen for the US dollar, 0.15 yen for the Hong Kong dollar, and 0.83 yen for the Singapore dollar.
(All images below are reprinted from the SBI Securities website)
After logging in to the SBI SECURITIES site, select the "Trade" menu from the menu bar at the top of the screen to switch to the "Order Entry" screen.
(Image = quoted from SBI Securities)Select the "Foreign Exchange" menu from the submenu at the top of the screen. ↓↓The exchange transaction screen will be displayed.
(Image = SBI SECURITIES)Select either "US dollar" or "Hong Kong dollar" according to the issue to be purchased, check the "Buy" button, and click the "Order entry screen" button. . ↓↓The order entry screen will be displayed.
(Image = quoted from SBI Securities)After confirming the displayed information such as the exchange rate at the time of the exchange transaction, the contract date, and the amount that can be purchased, enter the purchase amount and enter the transaction password. increase. After confirming the entered information again, click the "To order confirmation screen" button. ↓↓The order confirmation screen will be displayed.
(Image = Quoted from SBI Securities)After confirming the order details, click the "Order Placement" button. ↓↓The order reception screen will be displayed. After confirming the order details, the exchange transaction is complete.
Purchase of ADRs and overseas ETFs can be ordered from the "Foreign Currency Commodity Trading Site". After logging in to the SBI SECURITIES site, you can switch to the foreign currency-denominated commodity trading site in the following two ways.
*When trading ADRs issued by the Indian government or Indian companies, or US ETFs tracking Indian stocks, you can also place orders from the "SBI SECURITIES US Equities App." Since Hong Kong ETFs are included in Indian stock-linked ETFs, here we will explain how to place an order from the SBI SECURITIES website.
(All images below are quoted from the SBI Securities site)
1 Click the "Trading" button of "Foreign stocks" in the "Trading and account opening" confirmation bar on the right side of the login screen.
(Image = quoted from SBI SECURITIES)2 Instead of step 1, click the "Foreign Equities/Overseas ETFs" menu in the menu bar at the top of the login screen to display the Foreign Equities/Overseas ETFs screen, then TOP You can also move to the foreign stock trading site by clicking "Foreign stock trading site" in the center of the page.
(Image = quoted from SBI SECURITIES)The "Foreign Currency Commodity Trading Site" will be displayed.
(Image = quoted from SBI Securities)Select the "Trading" menu from the menu bar at the top of the screen. ↓↓The order entry screen will be displayed.
(Image = quoted from SBI Securities)Clicking on the country name of the stock to be purchased (US, Hong Kong, Singapore) will display the order input screen for the corresponding foreign stock. Select the transaction details, deposit category, settlement method, etc., and enter the ticker, stock price, and number of shares. After confirming the input contents and finally entering the "transaction password", click "To order confirmation screen". ↓↓The order confirmation screen will be displayed. (I do not endorse any particular brand)
(Image = quoted from SBI Securities)After confirming the order details, click the "Order Placement" button at the bottom of the screen. ↓↓ The “Order acceptance screen” will be displayed, and the purchase order will be placed.
4 SBI Securities is recommended for investing in Indian stocks
Which securities company should I use for investing in Indian stocks?
The four online securities companies (SBI, Rakuten, Monex, and DMM) that handle foreign stocks differ in the number of investment trusts they handle and the issues they handle. Not much difference. However, SBI SECURITIES is recommended because it is generally easy to use, such as the brand function of Indian stock-related stocks.
It is not possible to buy Indian shares directly from any broker in the country. Therefore, if you want to invest in Indian stocks, you will use a brokerage company that has ADRs, overseas ETFs, investment trusts, etc. linked to India.
SBI Securities, Rakuten Securities, and Monex Securities, whose main customers are business people and provide foreign stock trading services, are US stocks (ADRs and ETFs) that invest in India. and Hong Kong stocks (ETFs), we have almost the same lineup of stocks.
* Only US stocks are handled by DMM.com Securities stocks
Comparison of number of Indian ADR issues among 4 companies (as of January 9, 2022)
| Brokerage Company Name | SBI Securities | Rakuten Securities | Monex Securities | DMM .com securities stocks |
|---|---|---|---|---|
| Number of stocks handled | 8 stocks | 8 stocks | 8 stocks | 8 stocks |
* Obtained from the ADR list on each company's website
Comparison of overseas ETFs with India as investment region and number of issues (as of January 9, 2022)
| Brokerage Company Name | SBI Securities | Rakuten Securities | Monex Securities | DMM .com securities stocks |
|---|---|---|---|---|
| Number of stocks handled | 3 US, 2 Hong Kong | 3 US, 2 Hong Kong 2 Singaporeans | 2 US citizens 2 Hong Kong citizens | 3 US citizens |
* Excerpt from overseas ETF search results on each company's website
You can buy investment trusts from three companies: SBI Securities, Rakuten Securities, and Monex Securities.
Comparison of the number of investment trusts that invest in India among the three companies (as of January 9, 2022)
| Brokerage Company Name | SBI Securities | Rakuten Securities | Monex Securities | ||
|---|---|---|---|---|---|
| Number of stocks handled | 34 | 42 | 21 |
| Number of accounts opened | Number of countries where foreign stocks are handled | Number of US stocks | th>Types of Chinese stocks | |
|---|---|---|---|---|
| SBI Securities | 7,717,000 accounts (end of September 2021) | 9 Countries | Individual 4,642 ETFs 342 ADRs 166 | Hong Kong Stocks |
| Rakuten Securities | 624 3,338 accounts (as of the end of June 2021) | 5 countries | Individual: 3,906 ETFs: 355 ADRs: 320 | Hong Kong stocks Shanghai A shares |
| Monex, Inc. | 1,972,642 accounts (end of September 2021) | 2 countries | Individual 4,463 ETFs 349 This ADR 256 shares | Hong Kong Stocks |
| DMM.com Securities Stocks | Undisclosed | 1 country | Individual: 1,261 ETFs: 138 ADRs: 118 | Not handled |
SBI SECURITIES in terms of the number of accounts opened is by far the number one. From this, it can be seen that many people evaluate SBI SECURITIES as an easy-to-use online securities.
SBI SECURITIES ranks first among nine countries in terms of the number of countries where foreign stocks are handled.
In terms of the number of US stocks handled, SBI SECURITIES is rapidly increasing the number of stocks it handles, and has surpassed Monex Securities, which has held the number one spot for the number of individual stocks.
Focusing on the market for Chinese stocks, Rakuten Securities handles Shanghai A shares in addition to Hong Kong stocks, making it a must-see for those interested in mainland China stocks.
SBI SECURITIES is suitable for those who want to invest not only in Indian stocks but also in individual stocks around the world in the future.
Click here to open an account with SBI SecuritiesOn the other hand, if you are interested in investing in Shanghai A shares other than investing in Indian stocks, Rakuten Securities is recommended.
Click here to open a Rakuten Securities account6 3 points to be aware of when investing in Indian stocks
Is there anything I should be aware of when investing in Indian stocks?
Because India is an emerging country geographically distant from Japan, investment in Indian stocks has different concerns than investment in domestic stocks. Persistent inflation fears, weak economic fundamentals, geographic issues and the nature of investable commodities are among the factors that could affect Indian stock prices and returns.
Because India is geographically far from Japan, the time difference has a considerable impact on the economy and stock prices. Stock prices have been rising steadily in recent years, but geopolitical risks are still high, and the risk of stock prices falling cannot be overlooked.
When investing in Indian stocks in anticipation of the growth potential of the Indian economy, you should pay particular attention to the following three points in consideration of the assumed risks.
Originally, moderate inflation brings benefits to society and the economy, as it leads to increased returns due to rising stock prices, booming export and tourism industries, and rising wages, along with rising prices. Excessive inflation, on the other hand, damages society and the economy.
For many years, India has suffered from rapid price increases and strong inflationary pressure due to excess demand and income growth due to population growth, inefficiency and high costs due to underdeveloped infrastructure.
The introduction of the inflation targeting system in May 2016 and the gradual increase in policy interest rates since June 2018 temporarily lowered the inflation rate.
After that, the policy interest rate was repeatedly raised and lowered with the aim of keeping the inflation rate within the target range. , After January 2021, the situation where the inflation rate exceeds the policy interest rate has been resolved.
Currently, the main objective of monetary policy is to stabilize the inflation rate. On the other hand, the fundamental problems of population growth, underdeveloped infrastructure, and chronic current account and fiscal deficits have not been resolved, so it will be necessary to carefully assess how far inflationary pressures can be contained.
Mr. Narendra Modi, who is currently serving as Prime Minister of India, has carried out a series of economic promotion policies called "Modinomics" since taking office.
Starting with promoting infrastructure development, attracting foreign companies, introducing advanced technology, legislation for early disposal of bad debts, unification of GST (goods and services tax: indirect tax), Adal number system (Indian style) He has played an active role in the development of the Indian economy, such as the introduction of the My Number system.
As of January 2022, in his second term as prime minister after the 2019 general election, he is implementing various policies while maintaining a stable political foundation.
In spite of this, there are still many fields in India where business efficiency and industrial structure reforms have not been realized. Job creation to accommodate the growing population remains inadequate.
Agriculture, where about 60% of the population is engaged, has long been viewed as a problem due to the large number of small farmers and low productivity. The Agricultural Reform Act, which aims to increase income in rural areas and improve productivity, was also forced to be abolished in November 2021 due to strong resistance from farmers.
Due to the delay in infrastructure development, there are still many areas with vulnerable roads, which leads to inefficient management of the distribution industry and is a factor that prevents foreign companies from entering India. Due to the unresolved delay in the development of the road network, the situation continues to be unable to meet the ever-increasing demand for road transport.
In order to aim for further economic growth in the future, it is necessary to effectively utilize the agricultural population and improve productivity, realize efficient distribution by accelerating the development of road infrastructure, and create jobs to increase the number of workers in the economy. It is an urgent issue to turn to the site of
Investors residing in Japan cannot invest directly in Indian stocks. Therefore, in order to invest in Indian stocks, there is no choice but to invest through products such as ADRs, overseas ETFs, and mutual funds.
The problem common to all products is the inability to respond to local environmental changes and stock price fluctuations in a timely manner.
In particular, packaged products such as ETFs and investment trusts are analyzed and managed by professionals. cannot be replaced with
In the modern age of the Internet, it is possible to view local news relatively quickly, even in remote areas. It is important to keep an eye on the movement from a positive perspective.
It is also essential to take measures such as making investment decisions after making future predictions by synthesizing various information, and having financial leeway to absorb a certain amount of price fluctuations.
7 How to choose Indian stocks
How should I choose stocks for Indian equities related products?
ADRs are the same as individual stocks, and investment decisions are made based on information such as the issuing company's future business prospects, performance, and recent stock price trends. In Indian ETFs and investment trusts, whether the liquidity of the fund itself is secured so that it can be traded at any time, whether the management cost is kept down, or at least when going back to the last five years or so, the total return (rate of rise and fall) has generally been increasing. Verify items such as whether or not
When selecting stocks to invest in, we screen them from a variety of perspectives, including the type of investment product, investment style, investment period, risk tolerance, financial status, stock price index, chart trends, etc. Choose a matching brand.
When investing in Indian stocks, we select stocks with a focus on the following points due to the peculiarities of the investment target.
India ADRs are issued by government or private companies whose domicile is India. Indian companies that have ADRs listed on the US market are often well-performing companies with good financial standings that meet the listing criteria, and are characterized by a wealth of investment information.
When choosing ADR stocks, you can make investment decisions based on the same criteria as for individual stocks. It is a good idea to check the individual stock information on the securities company website and select stocks that meet the following conditions.
When choosing an ETF or mutual fund, check the investment performance and specifications of the fund, and judge from the aspect of whether you can get a return, whether you can hold it for a long time, and whether you can cancel at any time. increase.
8,Indian stocks recommended by the editorial department
If you have any specific stocks to recommend, please let me know.
There are not many Indian stock related products and brands that can be traded from Japan. Among them, we carefully selected ADRs issued by India's leading blue-chip companies that are growing sustainably or have future prospects, and Indian ETFs or investment trusts whose stock prices have been on an upward trend over the past three years. Introducing the brand name and simple specs. See below for details.
In anticipation of future economic growth, what kind of stocks can be invested in to take on the challenge of investing in Indian stocks? We carefully select and introduce stocks that meet the above stock selection criteria.
It is not possible to directly purchase individual stocks listed on Indian stock exchanges through domestic securities companies, but Indian ADRs listed on US stock exchanges can be substituted.
Based on public information, we have selected Indian companies that have future potential, strong business performance, and steady stock price trends. Here are 5 recommended ADRs:
In addition, common stocks of the following 5 ADR stocks are also listed on the NYSE at the same time, and Monex, Inc. handles both ADRs and individual stocks (common stocks).
It is a major IT company representing India.
Our core business is application development and maintenance, but we also provide infrastructure management, business information technology services, IT consultancy, enterprise solutions, and next generation services.
Evaluation of Infosys Technologies ADR
| Price change over the last three years | Dividend yield | Performance | Marketability |
|---|---|---|---|
| Increase | 1.67% | 3 consecutive years of revenue and profit growth | Good |
| Minimum investment amount (based on closing price on January 7, 2022) | |||
| 24.20 US dollars (2,783 yen) * |
*Assuming 1 USD = 115 JPY
It is a major pharmaceutical company representing India, selling pharmaceuticals to 60 countries around the world. Founded in 1984. As a pharmaceutical company, it is a relatively new company even from a global perspective.
Our main business is the manufacture and sale of generic drugs that can be manufactured at low cost, and we are known as one of the world's leading generic manufacturers. In recent years, we have also been focusing on the development of original brand pharmaceuticals.
Evaluation of Doctor Ladies Laboratories ADR
| Price change over the last three years | Dividend yield | Performance | Marketability |
|---|---|---|---|
| Increase | 0.53% | Results in the black for the last 3 consecutive years | Good | Minimum investment amount (based on closing price on January 7, 2022) |
| US$63.62 (approximately ¥7,316) * |
*Assuming 1 USD = 115 JPY
A world-class IT company that operates in 62 countries around the world. We are demonstrating our presence in outsourcing for overseas markets.
IT service business that provides IT services such as IT consulting, custom application design and development, system integration, and package implementation, as well as our own and third party IT products and software products that form the basis of IT services. We are engaged in the IT product business.
Evaluation of Wipro ADR
| Price change over the last three years | Dividend yield | Performance | Marketability |
|---|---|---|---|
| Increase | 0.15% | 3 consecutive years of revenue and profit growth | Good |
| Minimum investment amount (based on closing price on January 7, 2022) | |||
| 9.61 US dollars (about 1,105 yen) |
*Assuming 1 USD = 115 JPY
It is a core company of the Tata Group, one of India's largest conglomerates, and is a major automobile manufacturer with the No. 1 market share for commercial vehicles and the No. 2 share for passenger cars in India. It owns well-known brands such as Jaguar and Land Rover.
Our head office is located in Mumbai, but we also have production bases in Thailand, Argentina, and South Africa in addition to India.
On October 12, 2021, we announced an expansion of investment in the electric vehicle business, and the stock price reached a record high.
Tata Motors ADR Rating
| Price change over the last three years | Dividend yield | Performance | Marketability |
|---|---|---|---|
| Rising to the right | None | Last 3 consecutive fiscal years in the red * | Good | Minimum investment amount (based on closing price on January 7, 2022) |
| US$32.88 (approximately ¥3,781) *1 |
*1 Assuming 1 US$ = 115 yen *2 Although the financial results continue to be in the red, (1) the stock price trend is steady, (2) the sales are strong, and (3) India is entering a demographic bonus period. We dared to select it as a recommended ADR because it is expected to grow in demand for automobiles and (4) is a core company of a conglomerate.
It is a commercial bank that boasts the second largest scale (share) in India.
We are engaged in a wide range of banking and financial services, including retail banking, financial intermediation, life and non-life insurance, and financial products and services, with a focus on investment banking.
We have a network of approximately 18,210 branches and ATMs nationwide and 110 Touch Banking divisions in over 30 cities.
ICICI Bank ADR Evaluation
| Price change over the last three years | Dividend yield | Performance | Marketability |
|---|---|---|---|
| Increase | 0.26% | Revenue and profit increased for the last 3 consecutive years | Good | Minimum investment amount (Based on closing price on January 7, 2022) |
| 21.70 USD (approximately 2,595 yen) * |
*Assuming 1 USD = 115 JPY
ETFs are a popular product for those who want to keep holding costs low and those who want to get the benefits of diversified investment without the hassle.
There are no Indian ETFs in circulation, but we will introduce 5 funds with good performance records from among domestic ETFs and overseas ETFs that invest in India.
The only ETF listed on the Tokyo Stock Exchange that includes Indian stocks. Since it is an ETF of "NEXT FUNDS", an ETF brand established and operated by Nomura Asset Management, holding costs are kept low and reliability is high.
Calculated and managed to link the performance of the reference stock index "Nifty50 Index".
Like Japanese stocks, you can trade with any broker. It is easy to understand the trading method, price movement, deposit and withdrawal flow, etc., and it is the most recommended brand for those who are new to Indian stock investment.
NEXT FUNDS Indian Stock Index Nifty50 Exchange Traded Fund Specifications
| Trust Fee Rate | Rate of Change | Dividend Yield | Number of Distributions | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 0.95% | 78.91% | 41.36% | 52.67% | 0% | Annually |
| Trading unit | Minimum investment amount (based on closing price on January 7, 2022) | ||||
| 100 units | 20,000 4,690 yen |
This is a NYSE Arca listed ETF established and managed by WisdomTree, an American asset management company.
It is calculated and managed so as to be linked to the performance of the WisdomTree India Earnings Index, which is a reference stock index.
Specs of WisdomTree Indian Equity Fund
| Expense ratio | Rate of fluctuation | Dividend yield | Number of distributions | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 0.83% | 94.03 % | 59.64% | 28.18% | 1.14% | Four times a year |
| Minimum investment amount (Based on closing price on January 7, 2022) | Brokerage company | ||||
| 1 unit | US$37.76 (approximately 4,342 yen)* | SBI, Rakuten, Monex, DMM |
*1 Assuming USD = JPY 115
This is an ETF established and managed by Lyxor Asset Management SA (France), a subsidiary of Societe Generale. It is listed on the Singapore market and is denominated in US dollars.
Calculated and managed to track the performance of the MSCI India Net Total Return (USD) Index, a reference stock index.
Lyxor MSCI India UCITS ETF Specifications
| Expense ratio | Rate of fluctuation | Dividend yield | Number of distributions | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 0.85% | 86.89 % | 52.83% | 23.90% | 0% | Annually |
| Minimum investment amount (Based on closing price on January 7, 2022) | Brokerage company | ||||
| 10 units | US$276.7 (approximately 31,820 yen)* | Rakuten |
*US$1 = 115 yen assume
This is a low-cost ETF brand of US asset management company BlackRock. It is denominated in Hong Kong dollars and listed on the Hong Kong Stock Exchange.
Calculated and managed in line with the performance of the reference stock index “S&P BSE SENSEX”.
Specs of the iShares Core S&P BSE SENSEX India Index ETF
| Expense ratio | Rate of fluctuation | Dividend yield | Number of distributions | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 0.64% | 102.82 % | 53.21% | 21.65% | 0% | Annually |
| Minimum investment amount (Based on closing price on January 7, 2022) | Brokerage company | ||||
| 200 units | 7,168 Hong Kong dollars (approximately 100,352 yen)* | SBI, Rakuten, Monex |
*1 Assuming HKD = JPY 14
An ETF branded by Deutsche Bank. It is denominated in Hong Kong dollars and listed on the Hong Kong Stock Exchange.
Calculated and managed to track the performance of the reference stock index "Nifty 50 CR".
Specs of db x Trackers Nifty 50 Swap UCITS ETF
| Expense ratio | Rate of fluctuation | Dividend yield | Number of distributions | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 0.85% | 93.31 % | 52.61% | 24.80% | 0% | Annually |
| Minimum investment amount (Based on closing price on January 7, 2022) | Brokerage company | ||||
| 5 units | 9,110 Hong Kong dollars (approximately 637,700 yen)* | SBI, Rakuten, Monex |
*1 Assuming HKD = JPY 14
Although holding costs of investment trusts are higher than ETFs, the variety of asset management companies' lineups is attractive.
As of January 2022, there are no purchase fees or cancellation fees for major online securities investment trusts, but all investment trusts have higher trust fees (holding costs) than ETFs. Consider the interest rate of the trust fee, the investment period, the return, etc. comprehensively, and come up with an investment plan.
SBI SECURITIES, Rakuten Securities, and Monex Securities, which handle investment trusts, have different product lineups (some overlap), but we have picked up one recommended investment target for India from each company. will be introduced.
An investment trust established and managed by Mitsubishi UFJ Kokusai Asset Management. The substantive investment target is Indian bonds.
It is managed for the purpose of stable monthly distribution, and is characterized by a high dividend yield compared to other investment trusts that invest in India.
Since stable distributions are made 12 times a year, the NAV is almost flat, and long-term holding for distribution purposes is recommended. It is not suitable for short-term sales as the price is unlikely to rise.
Specifications of Mitsubishi UFJ India Bond Open (Monthly Settlement Type)
| Administration fee | Rate of change | Divided yield | Number of times distributed | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 1.63% | - 31.40% | -11.78% | 1.85% | 10.28% | 12 times a year |
| Trading Unit | Minimum Investment Amount (Base Price on January 7, 2022) | ||||
| 1 unit | 8,354 Yen |
An investment trust established and managed by Nomura Asset Management. We will mainly invest in public and corporate bonds issued by Indian corporations through the mother fund.
It is suitable for holding for the purpose of stable distribution.
Nomura India Bond Fund (Monthly Distribution Type) Specifications
| Administration fee | Rate of change | Divided yield | Number of times distributed | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 1.744% | 4.48 % | 8.12% | 14.74% | 4.9% | 12 times a year |
| Minimum investment amount (as of January 7, 2022 NAV) | |||||
| 1 unit | 7,224 yen< /td> |
An investment trust established and managed by Shinsei Investment Management. Through the mother fund, we mainly invest in stocks listed on Indian stock exchanges.
Although we can hope for a rise in the standard price, distributions are basically not paid.
By holding in the medium to long term, you will be able to obtain greater returns along with the growth of the Indian market.
Specifications of New UTI India Fund
| Administration fee | Rate of change | Divided yield | Number of times distributed | ||
|---|---|---|---|---|---|
| 5 years | 3 years | 1 year | |||
| 1.954% | 143.38 % | 85.69% | 43.04% | 0% | Annually |
| Minimum Investment Amount (Base Price on January 7, 2022) | |||||
| 1 unit | 34,812 Yen |
9,FAQ
How to start investing in Indian stocks and how to choose stocks, points that many people are concerned about Let's check again in Q&A format.
10, The significance of starting investment in Indian stocks and the timing of "now"
Investing in Indian stocks is one of the methods of internationally diversified investment. By investing in India, which has high growth potential, not only can you expect profit from price increases in the future, but you can also expect a large risk diversification effect.
The specific procedures for investing in Indian stocks and how to select stocks are the same as investing in US stocks, Hong Kong stocks, or investing in domestic investment trusts.
Even if you have focused only on domestic stock investment so far, if you think that it is the same as investing in US stocks, which many users use, the psychological hurdles of investing in Indian stocks will be lower.
If you are interested in India as a future economic powerhouse, now is the time when it is still small. "Grow big with little capital". It may be the perfect time to taste the charm of investing in Indian stocks.
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