If you are a retail investor (like me) then there is no point in looking outside India. Diversification and Concentration is a separate topic and you need to take a stand irrespective of which country you invest in? There is nothing stopping you from diversifying your investments in India Equity. There are 5000+ companies available across all sectors.
Why go outside when there are so many opportunities in BSE and NSE? Valuation is subjective and in my opinion it is not expensive to warrant such a decision.
Investing in the other countries is a high risk investment. You need to have a thorough knowledge about the various factors affecting the stock market. We have to work so hard to grasp the equity investment in India where we feel to know most of the factors but still do not know many things. I would caution you about the risk in investing in other countries and that too smaller than India.
you cant compare apples to mangoes. the PE ratio depends on the countries overall growth, opportunity size, political/economic conditions etc. however there might be some potential if you catch a mnc starting a business in that country and you catch it young.
Unilever Nepal looks very amusing if you can somehow play it. With international investing , one of the biggest worries is the price stability. With nepal, its not even the issue as their currency is pegged to INR at 1.6 since 1993. Their have been some talks of doing away with the peg. In reer terms,theircurrency is overvalued.Withoutpeg it will correct to about 1.8-2 level considering the tradedeficitthey run with India.Historically,they had devalued their currency once in the 60s. So tail risk spoils your returns by 20%. But they aren’t going to do it in a hurry. They don’t have exporters to back up the currency devaluation. All they will get is imported inflation.
PS: Pakistan Unilever is delisting. Acacia partners (4%) were not happy by their offer. Perils of international investing!
If you want to invest abroad, the easiest way to do so is to pick Global Equity Mutual Funds in India. Last year, I invested in BSL International Equity Plan and ING Global Real Estate Plan. I recently (last week) exited both, as the charges were high, and at least part of the returns were due to Rupee Depreciation. But all told, they certainly returned more than Diversified Indian Funds. I am still holding on to a Greater China Fund.
But, in general, I agree with Manishbhai and the others. Unless you have a lot of money to invest, you are better off seeking diversification amongst stocks and asset classes in India, rather than seeking diversification around the world.
**Samirbhai, you were fortunate to have invested in the global funds when the rupee has depreciated a lot. In the reverse case, you may hardly get any returns. I had studied the global funds earlier but found Indian equity more lucrative with high conviction level. Coming to Greater China Fund, I have read somewhere about many Chinese companies inflating their balance sheet to get higher subsidies and higher finances. I somehow feel the Dragon risky. **
I Opened account in Sri Lanka and Bought Neslte Lanka ( PE 27 with 98% Div Payout, 3.5% Div Yield, growing 10%) and Chevron Lubricants ( 50% market share with 70% ROE, 6% Div Yield and available at 11PE)
Bank Account in ICICI bank, Colombo branch
Trading account with Bartleet Religare Securities.