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August 11, 2005
India Fund at record high, Thurs., August 11, 2005, 6:32 AM
The Morgan Stanley India Fund (NYSE: IIF) set a new all-time record yesterday. One look at the long-term chart, shows how much better traders would be doing invested here rather than the broad equity market in China.
A look at the trading for the past few days shows that the IIF India Fund is not for the queasy trader, however. The price has been up and down like a roller coaster.
In March this year, I mentioned that I was going to be putting a lot more effort into India. Those good intentions were sidetracked by personal matters, but now I am back into discussions with people in Mumbai and Bangalore with a view to facilitating trade and investment there.
Stay tuned for something to be announced in mid-to-late September.
Posted by Posted by Bill Cara on August 11, 2005 06:32:58 AM | Category: ETF , India
Discourse
IIF and IFN currently carry a premium of at least 10% compared to historical 12% discount to NAV.
- Dennis
Posted by: Dennis at August 11, 2005 1:47 PM [link]
I doubt anytime soon in the next 1-2 yrs will it trade at discount. Unless you have total US market failure, it'll remain at a premium. Best economy hands down. I am nervous at the explosive growth but while GDP is a healthy 7% even at 5% it most definitely is growing. I am hoping for further ADR's to be sponsored
Posted by: dinov at August 11, 2005 2:33 PM [link]
Dennis,
I just received the same note from another reader, as follows:
HI BILL, A FEATURE IN TRADER MONTHLY (p.38, Aug/Sep) DISCUSSING INDIAN STOCKS MENTIONED A HEDGE FUND MANAGER (Neal Berger) ARBITRAGING THE INDIAN ADRS SCARCITY PREMIUM VS. THE UNDERLYINGS DUE THE GOVERNMENT RESTRICTIONS ON TRADING ON THE INDIAN EXCHANGES DIRECTLY. I DON'T KNOW HOW MUCH TRUTH THERE IS TO THAT (TRADER MONTHLY IS SORT OF A MAXIM MAGAZINE FOR TRADERS, MAYBE YOU KNEW THAT ALREADY...), BUT THE ARTICLE CLAIMS HE IS MAKING 20% ON THE ARB.... I WOULD ALSO BE CURIOUS AS TO WHAT YOU THINK OF INVESTING IN INDIA VIA THE ADRS.
I don't like paying a premium to NAV, especially if there are ways for some traders to be continuously exploiting the spread. I'd have to look into this before commenting further.
/Bill
Posted by: Bill Cara at August 11, 2005 2:38 PM [link]
Bill,
I think something is out-of-whack when a closed-end-fund like IIF trades at such a high premium. A discount is more normal because of lack of liquidity of the underlying (foreign) asset. I merely wanted to point out that hot money chasing these stocks is bidding the premium up and down, and therefore the unusual volatility. For example, there are at least four opportunities in the last 12 months to buy IIF at near net asset value
http://www.etfconnect.com/select/fundPages/global.asp?MFID=10541
Thank for writing this blog, I really enjoy reading it.
- Dennis
Posted by: Dennis at August 11, 2005 10:38 PM [link]
I totally agree with Bill. Even though IIF is at a record high there seems to be no slowdown. When investing in this particular market you have one too many factors to consider but I believe the rewards outweigh risk. The relationships with the USA is expanding at a torrid pace and everybody from IBM to GM is opening up shop there. It will overtake the hype of China in the next 10-15 years as they are a service industry and these very industries are what keeps these S&P companies constantly reporting positive upsides. Cost cutting is the only way to get by rising rates and this is the place to do it. Equity mutual funds average a 1 YR return of 45% While the Dow see-saws to reach new highs this one shoots up in a straight line. The finance minister has been constantly warning people that the markets are smoking hot but incoming foreign investment chasing the larger stocks is just too strong driving the Sensex even higher. I favor this market over Brazil & Russia and its stock market has been in existence for an extremely long time. Take advantage of it on any political unstability.
Dino
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at
August 11, 2005 9:42 AM [link]