 "Umang Papneja, CEO, Julius Baer India")
Julius Baer is the largest foreign private wealth manager in India, handling assets worth more than $21 billion. Operating in the country since 2015 and having acquired Merrill Lynch’s India business, the Swiss firm has set a goal of becoming the country’s largest wealth manager. Umang Papneja, chief executive officer of Julius Baer India, said the country’s economic growth would underpin the demand for wealth managers. Short-term volatility creates opportunities to invest in Indian equities, Papneja said in an email interview with Samie Modak. Edited excerpts:
How important is the India market for you?
India is one of the fastest growing economies globally pegged to become the third-largest by 2030. This exponential growth has given rise to three individuals joining the ultra-high networth individual (UHNI) club ($30 million plus) in India every day. Keeping in line with this progress, Julius Baer has significantly expanded its footprint in the country, currently operating in seven cities with plans to extend to 10 cities over the next few years. We currently have almost 70 relationship managers with a deep understanding of client needs equipped to provide tailored India centric strategies and bespoke solutions. Today, Julius Baer is the largest foreign wealth manager in India, both in size and scale and our goal is to be the largest wealth manager in India.
What are the growth drivers for private wealth managers operating out of India?
Private wealth managers in India currently benefit from the country’s robust economic growth, growing financial awareness, and evolving investment trends. While the investment focus in 2009-10 centered on real estate, our clients now favour alternative investment funds (AIFs), which have seen remarkable growth since their emergence in 2012. Recent trends also highlight an interest in ESG (environmental, social, and governance) investments.
What’s the outlook for the equity and debt markets over the next one year? Any other asset class you favour?
The Indian equity markets have been resilient, driven by robust macroeconomic factors such as a strong government balance sheet and microeconomic factors including healthy corporate and household balance sheets. While the long-term growth narrative remains intact, short-term volatility may arise due to emerging global challenges, presenting opportunities to invest in Indian equities. When it comes to the right product mix for our clients, we suggest a diversified portfolio with a sector-agnostic approach.
What does the real estate sector look like?
The Indian real estate sector holds great potential, as private equity investments have been steadily increasing. Projections indicate that these investments are set to reach $54.3 billion by 2047, growing at an annual rate of 9.5 per cent. Real estate investment trusts (REITs) and Real estate AIFs have contributed to buoyancy in the real estate market.
How do high US bond yields impact Indian equities?
To a certain extent, stronger US bond yields have negatively impacted the appeal of Indian equities for foreign investors. However, the overall effect on equities depends on macroeconomic factors, the objective of investment, and how equities are viewed relative to other asset classes. Hence, strong economic growth factors and the potential for capital appreciation and dividends can offset the impact of rising US bond yields, making stocks an attractive investment option in certain circumstances.
Two-year returns for India on a US dollar basis are way below US equities. How are clients reacting to it?
Although India’s two-year returns on a US dollar basis fall significantly short of those in US equities, the outlook for the Indian equity markets remains optimistic. Clients continue to view India as an attractive market due to its stable democracy, robust capital markets, and substantial reserves. If the US dollar weakens in the coming year and Chinese stocks remain off-limits to foreign investors due to geopolitics and slow economy in the region, foreign capital is likely to flow into Indian stocks.
Which are the most promising markets globally? Is India’s premium valuation to other emerging markets (EM) peers
a concern?
In 2023, India has outpaced China to become the leading emerging market for investment. This shift is attributed to India’s business-friendly policies, a highly skilled workforce, abundant resources, liberal FDI regulations, a sizable domestic market, and significant GDP growth potential. While the country’s premium valuation compared to other emerging market peers may raise concerns for some investors, the nation's promising growth prospects and distinct market dynamics continue to position it as an appealing investment destination.
