There is a clear shift in preference from ‘Dragon’ to ‘Elephant’: Sunil Singhania

Sunil Singhania

Prominent investor and Abakkus Asset Manager LLP founder Sunil Singhania shared his views from his recent visit to the US to attend the annual general meeting of Berkshire Hathaway through a write-up titled The Singing Sun, random thoughts by Sunil Singhania where he discussed how global investors see the Elephant, a metaphor for India, as the next major investment destination in a marked shift from their earlier preference for the Dragon, i.e., China.

Singhania’s key takeaways from his US trip 

India's investment appeal 

Interest in India and Indian equities remains high among allocators and fund managers. The shift from investing in China to India appears to be a clear medium-term trend. India’s growth story is well-known among investors, and the focus has now shifted to valuations and identifying potential investment opportunities beyond the NIFTY50.

“Meetings with allocators and fund managers unanimously indicated increasing interest in India and Indian equities. Over the last few years, one does not have to sell the Indian growth story as most are already aware of the same. It is now a question of valuations, when to buy and what to buy.”

Also read: The pangs of diversification: Are your equity funds investing in the same stocks?

Omaha Annual General Meeting, experience and lessons 

The annual shareholder interaction with Warren Buffet and Charlie Munger in Omaha was a unique experience, according to Singhania. The city thrived during the event, attracting thousands of admirers, boosting the local economy. The meeting itself was highly anticipated, filled with energy and enthusiasm. Buffet and Munger, despite their advanced age, delivered sharp and witty insights. The importance of consistency, love for work and continuous learning were the key takeaways from the meeting.

“Like excited first timers, we visited Warren Buffet’s house where he was born (no one stays there anymore) as also his current house where he has been staying for decades. A modest house in a modest city is a lesson in disguise that wealth is not the biggest and most expensive house, but the respect and love that one gets with thousands clamouring to get one glimpse of you for the satisfying work one has done.”

“Being successful in life is not doing too many extraordinary things but doing things consistently well and the love for one’s work is much greater satisfaction than all luxuries of the world.”

Views on US Inflation, commercial real estate and the future of the digital world 

Both New York and San Francisco experienced high inflation, says Singhania, leading to increased prices of various goods and services including transport, dining and housing costs. Commercial real estate faces challenges in both cities.

“Inflation was noticeable, with prices for various goods and services rising by almost 50 percent compared to pre-COVID levels. Commercial real estate faces challenges due to lower tenancy and high interest rates.”

“The digital world is here to stay and flourish. Despite recent layoffs and start-up funding holiday, the ecosystem of tech and digital continues to be vibrant. Young techies continue to be energetic and keep working on new ideas and the economy also is pretty decent. Inflation, like was experienced in New York, is clearly visible here too. Uber rates are up, and restaurant bills are not cheap. House rents are still very high, though commercial real estate is surely facing massive headwinds. Work from home is now a norm here, though Ujjwal tells me that they (he works for AWS) have started work from the office twice a week and by September it will be all days’ work from office.”

On the future of electric vehicles 

He observed the prevalence of Electric Vehicles (EVs) in San Francisco, with Tesla being a prominent choice. EV technology and performance were impressive, according to him and he believes that the transition to EVs is going to be swift and much faster than anticipated.

“Electric vehicles are everywhere, and Tesla is seen more than any other car maker including the traditional cars. Ujjwal has a Tesla, and he was explaining the dynamics to me. Each visit to San Francisco and back from Cupertino is $170-180 and thus 3 visits a month are equal to his monthly instalment on his Tesla. There are no other costs, with charging free at his office or a small sum if charged outside. The technology and performance of these EVs are out of the world and the traditional cars will struggle to match them.”

Who is Sunil Singhania? 

Singhania has been tracking Indian equity markets for almost 28 years. He has successfully managed equity assets for the last 19 years. He founded Abakkus Asset Manager LLP in 2018 and it has grown to almost $1.4 billion in less than four years. He has also served as the Chief Investment Officer of equities and global head of equities at the Reliance Capital group, managing India-focused equities of over $10 billion.