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Serious erosion of confidence in HNIs: Co-founder of Sanctum Wealth Mgmt

Hindustan Times, Aug 20, 2019

Mumbai: Last week at the Red Fort, in the Independence Day speech, Prime Minister Narendra Modi said that wealth creation is a great national service. “Let us never see wealth creators with suspicion. Only when wealth is created, will wealth be distributed. Those who create wealth are India’s wealth and we respect them,” Modi said. To get a sense of how the ultra-high-net individuals (HNI) and HNIs are reacting to the cyclical slowdown in the economy, HTMoney spoke to Prateek Pant, co-founder, Sanctum Wealth Management. “There has been a serious erosion of confidence among HNIs on traditional listed equity as well as the sharp draw-down in the debt instrument securities people have seen,” said Pant.

Edited excerpts from the interview:

Considering we are going through a downturn, how long will it take for revival in the investment cycle?

It is going to be a patient game. We will need to see some kind of confidence-building measures from a policy perspective, whether it means having room from a fiscal expansion point of view or seeing some packages for some industries. I don’t see corporate earnings reviving by itself. You will definitely have to see some sort of an intervention in the form of policy measures to spur investment back. You need to create aright investment environment. It is wishful thinking that corporate India will be putting investment on its own.

What is your advice for investors looking at real estate and gold?

We were underweight on gold for a long time and now we have gone overweight on it. In times of uncertainty, practically in the short run, gold does a good job on holding on to the value. There is a lot of liquidity that has come into gold. Real estate is one of the sectors going through a structural change. I don’t think the earlier paradigms are going to get repeated. We will see investments moving away from residential real estate to newer trends such as sharing economy and co-living. You are not going to see the same kind of high. Things such as demonetization, goods and services tax (GST) and Real Estate (Regulation and Development) Act (RERA) have created a permanent impact, which has changed the whole equation of this sector. Instruments like REITs will be a good instrument for exposures into real estate for investors.

What are the current sentiments of HNIs?

There has been a serious erosion of confidence within HNIs on traditional listed equity as well as the sharp drawdown in the debt instrument securities people have seen. Having said that, smarter people are looking at how they can double up exposure. Many HNIs are looking at private investment opportunities through alternative Investment funds (AIFs), investment into unlisted securities and overseas investment. Traditional investments are on the backburner while alternatives are looked at closely.