In an interview with ETMarkets, Kapoor said: Edited excerpt:
What impact are locally grown millionaires and billionaires having on the wealth management landscape in India?
Most of the ultra-high net worth investors have become knowledgeable thanks to in-house family offices managed by experienced teams. These family offices give access to deals and opportunities directly from the caller .
Therefore, reliance on traditional wealth management firms and advisors is decreasing. As a result, wealth managers are more focused on offering differentiated products and services for investor engagement.
Service delivery based on transparency, cost-efficiency, cutting-edge technology, and added value such as global opportunities, wealth planning, business advisory, arts, philanthropy, and social impact investments is becoming increasingly necessary by the minute. I’m here.
Private deals are becoming an important and rapidly growing asset class (average portfolio allocation is 10-15%).
Boutique dealmakers and syndicators are proliferating as they no longer need large distributors to reach investors.
Many experienced wealth professionals now run one or more family offices, creating a talent shortage in the wealth management industry.
How do Indian business families manage wealth transfers?
Large business families turn to property planning services early on to ring-fence and protect their assets to ensure seamless wealth transfer between generations.
They are also beginning to aggressively reshape their operations to align with the vision and aspirations of the next generation, which is more technology-oriented. Splitting up and monetizing underperforming assets helps keep the business contained and manageable with clear chains of command and succession.
Large families also seek global diversification of wealth, ensuring tax optimization and efficient transfer of wealth not only to immediate beneficiaries but also to grandchildren and a long-term commitment to social causes. To do so, we are building trust structures across multiple jurisdictions.
Some families are increasingly turning to corporate trust companies to ensure that their trust legacies continue more efficiently and professionally across generations.
The need for legacy and succession planning is no longer confined to business families. Senior professionals and entrepreneurs also focus on putting homes in order through planned inheritance and wills.
With global stock markets down double digits, do you think this is a good time to diversify globally or do you still think India is the market of choice? is it?
The International Monetary Fund (IMF) has lowered its 2023 global growth forecast to 2.7% from 2.9%. The developed world is expected to grow at an even lower rate of 1.1% in 2023.
India’s growth forecast has been lowered to 6.1%, but remains high among other major economies. India is in a sweet spot where economic growth should stand out compared to the global economy for several years.
Strong demographics, a stable political regime, improved ease of doing business, and India’s rise as a manufacturer (replacing China and Europe) are some of the factors that contribute to this proposition.
In addition to the unique opportunities in the Indian market, regulatory restrictions on cross-border remittances suggest that India remains a preferred investment destination.
That said, we encourage our clients to diversify their investments across global markets, particularly US tech stocks.
There is a general feeling that the worst of global markets is not over, and as such many interested investors will have to shift their global exposure or wait for better entry levels.
2022 ended on a positive note, and 2023 started on a low note tracking global cues ahead of the budget. What do you think of the market?
Amid uncertainties in the course of monetary policy actions, inflation and geopolitical conflicts, we believe global shifts in supply chain de-risking will sustain global market volatility and benefit emerging market economies. I believe
India’s strong domestic demand, coupled with its coordinated fiscal and monetary measures, will put it in a dominant position not only to capture manufacturing space in the world, but also to earn higher valuation multiples.
The rupee weakened slightly. What are your thoughts on currency movements in 2023?
A confluence of high inflation, the hawkish monetary policy of the US Federal Reserve, geopolitical rivalries and the US dollar’s safe-haven status propels the US dollar, pushing commodity importers into currency depreciation. exposed. The INR fell 11% against the US dollar in 2022.
However, resilient domestic growth and comfortable fiscal conditions should support the INR unless the 2023 trade imbalance hurts the CAD.
We believe the 2023 INR trajectory will be determined equally by global geopolitical and growth dynamics (which remain fluid) and sound domestic fiscal management.
INR is expected to trade in the 82-84/USD range in 2023. Weak oil prices act as a buffer for the economy, but a big spike could hurt the economy.
Which sectors to overweight in 2023 and why?
We are overweight commercial banks as we expect net interest margins (NIMs) to hold until at least H1-2023. The defense sector will benefit from increased global defense spending.
Valuations need to be carefully monitored here. We theme the revival of private CAPEX through industrial, cement, specialty chemicals, and real estate accessories.
Which sectors to underweight in 2023 and why?
IT services may continue to be under margin pressure due to cost pressures and uncertainty in the global economy.
New-age Internet companies are also expected to continue to face pressure on valuation multiples and an accelerating need to chart a path to profitability.
How should we treat the small- and mid-cap theme in 2023?
We believe production is slowly and steadily moving from Europe and China to India after the pandemic. As India’s GDP is expected to grow from 5 trillion to 10 trillion US dollars in the next few years, small and medium-sized businesses are expected to be the main beneficiaries of this growth.
These companies are more dynamic and are in the process of evolving their organisations, unlike larger companies with management hierarchies and organizational structures in place.
There are attractive opportunities for companies with high quality and growth potential. We encourage you to take advantage of this opportunity through funds with a long track record.
(Disclaimer: Professional recommendations, suggestions, views and opinions are their own and do not represent the views of The Economic Times)