June 09, 2008 at 1:00 am by Tom Lydon
India’s economy is growing and outpacing the U.S., but what about the India-related exchange traded fund (ETFs)? They are down year-to-date, but there could be potential in the future. Larry Edelson for Money and Markets gives six reasons for India’s potential:
- India has the fastest growing population in the world. The rate is at 16 million per year, and by 2030 could exceed China. Per capita income also continues to rise.
- Government investment in the country’s infrastructure is up. Around 9.9% was invested in 2007. Auto sales have a 17% growth rate and the government will spend $90 billion on industrial related projects over the next 3 years.
- 30% of the economy is in manufacturing. The largest employer is the manufacturing sector which employs more than 25% of employed Indians.
- Corporate earnings in India are growing. The 30 largest companies in the Mumbai Sensex Index upped earnings 35% in the first quarter 2008. Out of 800 publicly traded companies, average earnings growth is at 17%.
- More private equity goes into India than China. In 2007, it was around $20 billion.
- The Indian middle class will be growing. With more disposable income, Indians will be spending, upping retail sales growth on average to 13%.
If you aren’t completely convinced, here are three ETFs to keep an eye on and watch how they trend:
June 9th, 2008 at 3:38 pm
Tom all this is great.
What about??
- Oil at 100+? India being an importer. and the goverment not passing the price on through to the consumer.
- Increasing current account deficit? leading to a weaker rupee (great for exporters of services but terrible for outside investors)
- Inflation.
- Net FII outflows.
June 9th, 2008 at 4:14 pm
Political stability will increasingly become an issue. As the divide between the have and have-nots becomes wider, more of the resource rich areas will rise up and demand that more of the money go to their people rather than the elite. Already, the untouchables are forming both political and militia cadres to push their agenda.