Retain underweight on India, RoE halves from 2005 highs: Siva

Sakthi Siva of Credit Suisse says while the slowing in China's return on equity (RoE) is well recognised and a key reason why MSCI China trades at a 27 percent discount on price-to-book versus RoE valuation model, she suspects most investors have not noticed a similar slide in India's RoE.

India's RoE has halved from its 2005 highs and its current level of 12.3 percent is similar to China's 12.2 percent, she adds.

According to her, even more striking is that the rate of slowing in RoE is remarkably similar in both countries recently. India's premium has once again risen to above 50 percent, Siva says, adding while history is not always an accurate guide, previous episodes were associated with underperformance.

"We retain our underweight on India," she says.