An event driven strategy

#1
This event based strategy was in my mind for sometime and I thought I would share my thoughts here for your feedback. I would try to give as much information about this strategy here and also the rationale behind it. With out further adieu.


Trade: BUY
Markets: India, South East Asia
Industry: Hospitality,Tourism, Travelling and Airlines
Minimum Investment Period: 6 months
Rationale:

1)Increasing Reputation of India
For last few months I have seen a recent rise in India's popularity in the world. Many people now wants to know more about india and its culture and also wants to experience our culture.

2)Relaxation of visa process
India Govt has brought "Visa on arrival or e-visa" policy in which citizens from recognized countries can now apply for visa to india online and will get visa on arrival at designated airport. This change in policy has already shown an increase in tourist in India.

3) Rising Global Terrorism and Instability
This is one of the biggest reason which I think would cause a jump in number of tourist to India and south East Asia especially from European countries. Traditionally European like to visit countries in Mediterraneans but recent attacks against tourist in Tunisia, Egypt, Turkey etc has made those places unsafe for tourist. Rise in terrorist organization like ISIS and instability of middle east has made those regions a bit volatile. Comparing to those places India is considered as a stable, safe and peaceful country for tourist and more tourist will flock to India.
 

natjay

Well-Known Member
#2
The rationale is definitely valid but despite an uptick in tourism & travelers to India, stocks in these sectors have generally underperformed or given negative returns.

Examples of airlines facing management, debt and payment issues are well known. Same with a lot of hotels (very few hotel stocks are clear Buy recommendations). So if we do end up buying something like Indian Hotels or Taj GVK then we'd have to hold them for years to see tangible returns.

Going forward, I'd bet on logistics and transportation stocks that have a positive outlook.
 
#3
The rationale is definitely valid but despite an uptick in tourism & travelers to India, stocks in these sectors have generally underperformed or given negative returns.

Examples of airlines facing management, debt and payment issues are well known. Same with a lot of hotels (very few hotel stocks are clear Buy recommendations). So if we do end up buying something like Indian Hotels or Taj GVK then we'd have to hold them for years to see tangible returns.

Going forward, I'd bet on logistics and transportation stocks that have a positive outlook.
Hey thanks for your feedback and I considered this as an long term investment only as I believe international tourism in india will increase dramatically. Any way why would you have a positve outlook on logistics and transportation? Is it because of the growth of e commerce?
 

natjay

Well-Known Member
#4
Hey thanks for your feedback and I considered this as an long term investment only as I believe international tourism in india will increase dramatically.
Tourism is definitely increasing but the problem is the balance sheets of companies connected to tourism, airlines, etc. are not very transparent. They're operating under high pressure, high debt and delayed payments. Hence my caution.

Any way why would you have a positive outlook on logistics and transportation? Is it because of the growth of e commerce?
Ecommerce is one of the reasons. The other is 'Make in India' where the focus is on manufacturing. If and when this sector picks up (by 2017/2018), I see transportation, logistics and infrastructure companies doing well. These companies also act as proxies to economic growth. Hence we could selectively start accumulating related stocks at this point based on value calculations and future growth potential.
 

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