Author: Pooja Malik, CFA, Chief Investment Officer
While much of the market remains narrowly focused on the AI trade, Nipun continues to take a broad view of emerging markets. Among the many things that evolve across EM, one remains unchanged: the phenomenon of mean reversion.
When I visited Bangalore in late summer 2023, the prevailing sentiment was one of near-euphoria around the India growth story. The optimism revolved around strong GDP growth, underpinned by a compelling structural thesis: lower oil sensitivity, rising consumption and earnings, growing domestic demand for equities and an accommodative RBI. Fast forward a few years and it is a completely different story. India’s underperformance relative to the MSCI EM Index is now the widest it has been over any trailing twelve-month period. On a cumulative basis, India has surrendered a full decade of outperformance (see chart below).
Having invested across markets for more than two decades, I have watched mean reversion assert itself time and again. Which brings us to the question of the moment: Will Korea prove to be the next shoe to drop? Korea’s ascent over the past twelve months has been remarkable, and conviction is now near-universal — much as it was for India a few years ago, and in every cycle before it.
At Nipun, our approach centers on investing steadily for the long term: avoiding hype, protecting the downside, and compounding capital patiently. We would welcome the opportunity to discuss further. Please contact Investor Relations at nora.cheung@nipuncapital.com.
Disclaimer: This post is for informational purposes only and does not constitute investment advice.
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