PM Modi, top ministers favour real estate, banks; stay clear of stocks

That’s ironic, given the efforts that the government has put in to bring more money into the stock market and the general perception of it being a champion of the market culture.

NEW DELHI: Dalal Street can’t have enough of them, retail investors are again developing a taste for them, but Modi’s navratnas hardly care for them.

Prime Minister Narendra Modi’s navratnas or top nine ministers have given the equity market a big miss in their portfolios, data compiled by showed.

That’s ironic, given the efforts that the government has put in to bring more money into the stock market and the general perception of it being a champion of the market culture.

Among various asset classes, real estate — the arch-enemy of equities — has emerged the hands-down favourite among Modi and his ministers, followed by bank deposits, insurance policies and gold.

Over the course of the past week, we dug deeper into the latest disclosures of assets and liabilities of the Cabinet ministers.

The focus of the research was on the top nine ministers, who are the most-visible representatives of the government in the public domain.

The research threw up some interesting facts.

Total assets of Modi and his ministers amounted to a staggering Rs 3,200 crore, out of which only a fraction (0.06 per cent) was allocated to equities.

The Prime Minister himself has allocated 79 per cent of his assets to real estate followed by 15 per cent to bank deposits, 1 per cent to gold and a big fat zero per cent to equities.

For a man who has been a market mover ever since he was named the prime ministerial candidate of the BJP way back in 2013, his allocation to equities is negligible.

But one can still a make case for Modi. A look at the returns given by the Sensex is enough to understand his decision.

The BSE benchmark has given only 5 per cent return in the past two years, underperforming bank fixed deposits, which gave an average annual return of 7.6 per cent in the same period.

It’s safe to say, Modi is as shrewd as an investor as he is as a politician.

Rahul Gandhi, his political opponent, has allocated 14 per cent to real estate, 9 per cent to bonds and only 1 per cent to bank deposits. His short-duration mutual fund investment, which mainly comprises short-duration bonds, has given an absolute return of 17 per cent in the past five years.

Manohar Parrikar, the outspoken defence minister, is the only saving grace for the equity market, with close to 12 per cent allocation to stocks, followed by Ravi Shankar Prasad, who has 6 per cent of his assets in equities.

Within real estate, though, most ministers have fixed assets such as agricultural land or residential property. Given the stagnation in real estate prices in the past four-to-five years, one wonders how prudent has been that decision.

Market experts who keep drumming about how equity market always outperforms other asset classes in the long run, could do well to share that wisdom with our Cabinet ministers and the Prime Minister.

Although the BJP has come to power as the representative of a new India, the investor in it still belongs to the old school.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s