Some months ago when I was considering a parking space for some unsheltered capital, I decided on a split between some short-dated, low-coupon Index Linked Gilts (TR24) and JPMorgan Indian Investment Trust (JII).
The rational behind the short-dated IL gilts for unsheltered capital has been well-covered elsewhere on these boards, and that March 2024 dated tranch of TR24 will mature to drop into my 2024 ISA allowance with a fairly well-timed alignment.
The other half of my unsheltered capital that I was wanting a longer-term market-facing home for went into JPMorgan Indian Investment Trust (JII), with the following rational -
- JII doesn't pay any dividends, and so will not impact my existing unsheltered dividend-income allowance, which is being actively managed down to continue ducking under the rapidly lowering tax-free dividend allowance of £1000 this year, and £500 from April 2024.
- India is one of the fastest growing major economies, with expectations of around 7% per year for medium-term forecasts.
- India has a growing, young demographic, with a strong work ethic and rising aspirations.
- India has a very cheap workforce when looking at global comparators.
- India might well be seen to be a 'safer alternative' for global outsourcing when compared to China, who might be perceived to have a riskier profile moving forwards.
This morning the Telegraph has an article discussing how China, the 'worlds factory', now faces issues where global supply chains are looking to move out of what might now be perceived to be a riskier and more expensive manufacturing market, and the article contains a chart of global wage comparisons -
The Telegraph article, which also covers benefits that Eastern Europe are also seeing from a trend away from Chinese manufacturing, can be accessed using the link below -
What the fall of the ‘world’s factory’ means for global supply chains -
China has long revelled in its role as the “world’s factory” but its dominance may be coming to an end.
Amid a rising tide of cost pressures, as well as president Xi Jinping taking a more hostile stance towards the West, chief executives are becoming increasingly keen to shorten their supply chains.
An American Chamber of Commerce survey in August found 40pc of US companies are already redirecting investment destined for China to other countries, or are planning to do so.
However, the US is not alone in moving away from China, as the president of one Japanese chip maker said that exporting from the country is just “no longer viable”.
Already, huge companies such as Apple, Dell, Microsoft and Nike have announced plans to shift production to the likes of Mexico, Vietnam, India and Thailand.
https://archive.ph/aE7i1
As an income-investor primarily, I do also look out for zero or low-yield opportunities for some allocations of my unsheltered capital, and focussing on the Indian market with part of that approach ticks a lot of boxes for me, where a medium to long-term return of around 6% would deliver on the capital-returns that I'm looking for with this chunk of cash.
Whilst in some areas India perhaps has some way to go in terms of becoming more aligned with established Western social and democratic values, I think the signs are there that there's a willingness to do so, within a young, hard-working, and vibrantly growing society that is looking to develop into one of the worlds future super-powers, and as the above article suggests, global supply chains looking for non-Chinese landing zones are likely to see India as a high-value candidate.
Cheers,
Itsallaguess
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