Funds favour India for returns; not China's Belt-and-Road project

Some of Asia’s biggest infrastructure investors are seeing plenty of opportunities in India. In China’s mammoth Belt-and-Road initiative, however, not so much.

India is a key market for Macquarie Group thanks to strong economic growth and state asset sales, said Frank Kwok, co-head of Asia Pacific at Macquarie Infrastructure & Real Assets. Hence its recent purchase of nine toll-roads with charges indexed to inflation.

China’s Belt-and-Road, however is more driven by geopolitics than investment returns, he said at the Bloomberg Invest Australia summit in Sydney on Wednesday.

“It’s very much a China-led initiative, but really it’s about the entire region,” said Kwok. “But because one of the main drivers is that it’s for China to exert its influence over the region, financial returns are probably not the top priority.”

Asia’s developing economies will need to spend about $22.6 trillion on projects like roads, bridges, ports and railways over the 15 years to 2030 in order to maintain economic growth and reduce poverty, according to the Asian Development Bank. China has stepped in to fund some of those investments with Belt-and-Road.