Monday, October 15, 2007

Bookkeping: Selling Down my 2 Indian Banks - ICICI Bank (IBN) & HDFC Bank (HDB)

I am always amazed to see how the ratio of Chinese to Indian financial stories is in a ratio of 20:1 - when you have 2 economies of similar scope, size, and strength - yet one seems to get all the attention. Perhaps it is due in part to the fact that there are very few ways of directly investing in India via ADRs where there are many more Chinese avenues.

Anyhow, one way to play the India story are the 2 banks available in the US, ICICI Bank (IBN) and HDFC Bank (HDB). I had not built really large positions in these two (under 2% at best), and have (again) been selling down these positions too early as the run in these names has gone farther than I imagined. So this last part of their run, I have been underweight and therefore not benefiting as much as I should be. But with emerging markets even more overheated than the US market, and the two names up 30 and 33% respectively in the past month (and a much higher rate of return off the August lows) I am going to be trimming these even further. It's a tough call because when you cut strong names, they have a tendency to just continue to run but with the weakening here in the US, perhaps this will cast some pall on emerging markets.

Notice how all these charts look so similar? And why its hard to find new entry points unless you are a pure momentum trader (buy high, sell higher). So this pattern in chart after chart is why I am having trouble finding places to put new cash to work.

Both positions are under 1% so not a major influx of cash from selling, but my cash is now over 17% of the fund as I remain defensive. I am also going to be researching more ways to play the Indian market for the future, as I believe it seems to get lost in the Chinese mania.

Long ICICI Bank, HDFC Bank in fund; no personal positions

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