Indian companies are dominating the ranks of the world’s best-performing industrial firms as they benefit from the neighbouring country, China’s pollution crackdown and billions in domestic infrastructure spending.
Of the 15 best-performing stocks over the last five years, eight are from Asia’s 3rd largest economy and range from graphite electrode makers to equipment providers. Companies such as HEG Ltd., Graphite India Ltd. and Finolex Cables Ltd. have benefited a lot from China’s pollution control measures as well as India’s pledge to electrify even the remotest village, said Gopal Agrawal, the portfolio manager at Tata Asset Management Ltd., which oversees $3 billion in equity funds.
Prime Minister Narendra Modi’s focus on electrification has had a tremendous increase in demand for cables and wires used in the power sector. India so far has added 100,000 circuit kilometres of interstate transmission capacity, according to a June 5 statement from the power ministry. The nation has also pledged to spend $88 billion this fiscal year on other amenities like roads, railways and other infrastructure.
“Graphite is a godsend opportunity from China,” said Agrawal, whose firm has the third-largest equity exposure to the industrial sector. “If China relaxes its environment pollution norms, that could negatively impact the party for India’s industrial firms.”
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India’s neighbour to the north- China meanwhile has tightened emission norms that spurred steel production from electric arc furnaces, which use graphite electrodes to process steel from scrap. With supplies also constrained, graphite electrode producer HEG’s stock surged 1,457 per cent last year, outpacing Bitcoin’s gains, and has climbed 45 per cent so far in 2018.