Prem Watsa prefers India to China

Prem Watsa thinks the time is right for India to break out economically, with the Fairfax Financial (Fairfax Financial Stock Quote, Chart, News TSX:FFH) CEO now saying his company will be doing a lot more investing in India for years to come.

That represents a notably different approach than he has towards China, however, which Watsa says is not so business friendly.

The Toronto-based property and insurance company Fairfax has made a habit of putting money into depressed businesses and struggling regions. Witness its recent pickup of the Canadian portion of Toys “R” Us, purchased for around $300 million, a move which came a little over half a year since its parent company in the United States filed for bankruptcy.

Or take a look at Fairfax’s investments in Greece, an economy that’s been suffering for years. Watsa says that with its stake in Eurobank and the insurance company Eurolife, Fairfax is one of the largest investors in the country.

“We’ve had some terrific success with Eurolife, which is one of the few places we do life insurance. It’s run by really good management,” says Watsa, in conversation with BNN Bloomberg. “Greece has gone through a depression worse than the [Great Depression] in the United States. Down 27 per cent and it’s about eight years with no recovery. United States went down about 25 per cent but after four years it started recovery.”

“But we look at every country — right now, the one that I really like is India. We have about $5 billion invested in India, and we have about 300,000 people that are employed there,” says Watsa.

“We took the stock Fairfax India public at about $10 and we raised some more money at about $11 and three-quarters and [now] it’s about $17. But the intrinsic value, which is what we focus on, is much higher,” says Watsa.

Fairfax India Holdings (TSX:FIH-U) began trading on the Toronto Stock Exchange in early 2015 and saw its share price almost double by the latter half of 2017.

Watsa says he’s a big supporter of India’s Prime Minister Narendra Modi, who he says possesses the business track record to bring economic prosperity to the country.

“When’s the last time you had a politician who has run a state or a province for 13 years [at] ten per cent economic growth, and then he becomes the prime minister of a country with a billion-two in population?” he says. “It’s not easy. 60-70 years of socialism and slowly and steadily, he’s freeing up the economy and making it business-friendly.”

Watsa is taking the opposite approach when it comes to China, however, saying, “We’ve got a small company there, but we’re less invested. We like democracy, we like business-friendly policies.”

“My political views are that [after] 40 years of travelling all over the world, I find that countries that have business-friendly policies do really well, whereas countries that don’t suffer. And for the ordinary person, business-friendly policies provide employment and they provide jobs. I’ve seen it all over the place,” he says.