Foreign investors will 'rediscover India' as earnings growth stays strong, says Blackstone's Jon Gray

Foreign investors could return to Indian markets as they search for growth opportunities around the world, despite recent portfolio outflows and a correction in equity valuations, according to Blackstone President Jon Gray.

Gray said India's GDP growth of more than 7% and projected corporate earnings growth at a mid-teens rate in the third quarter supported the long-term investment case, even as concerns over energy prices, valuations and artificial intelligence (AI) weighed on market sentiment.

"I think foreign investors, as they look for growth around the world, will rediscover India," Gray said in an exclusive interview.

His comments come amid contrasting trends in Indian capital markets, with strong initial public offering (IPO) activity alongside record foreign portfolio investor (FPI) outflows.

Earnings growth supports India's investment case

Gray said market sentiment can shift quickly. Indian equities commanded high valuation multiples when sentiment was particularly positive two years ago, but concerns over elevated prices, rising energy costs and AI's potential impact on

IT services have since contributed to a correction.

He argued that investors should look beyond short-term market movements and focus on the economy's underlying growth.

"Here, you have a place that's growing at more than 7%, which is pretty remarkable," Gray said.

He added that corporate earnings were projected to grow at a mid-teens rate in the third quarter, which he described as strong.

Strong IPO activity highlights India's capital-market depth

Gray described India's capital markets as an important asset for long-term growth and capital formation, pointing to the liquidity available to companies seeking to raise funds.

Blackstone has completed 14 IPOs in India over time, he said. Five of the country's six publicly listed real estate investment trusts (REITs) have also been sponsored by the firm.

Gray said the strength of India's capital markets was valuable for the country's long-term development, even as foreign investors reduced their exposure to equities.

He also highlighted the resilience of domestic investors, saying the local market had remained strong and invested despite foreign selling.

Market correction could create investment opportunities

Gray said the pullback in Indian markets could allow long-term investors to buy businesses and real estate at more reasonable prices.

He recalled that after the global financial crisis, many investors had said they would not return to India. Blackstone, however, maintained its long-term commitment to the market.

While acknowledging the risks in the current environment, Gray said the problems were not comparable in severity to those affecting the financial system after the global financial crisis.

He argued that investors who remain confident in India's prospects could benefit from deploying capital when valuations are more attractive.

The reality is that in a moment like this, when the market pulls back, you may be able to buy better businesses and better real estate at more reasonable prices, and your reward in the end could be even greater.

JONATHAN GRAY, PRESIDENT OF BLACKSTONE GROUP

 

For the full interview, watch the accompanying video