Why the IMF Is Bullish on India’s ETFs
January 29th, 2010 at 11:00am by Tom Lydon
India has all eyes in its burgeoning economy, and the International Monetary Fund (IMF) is no exception. The fund is feeling bullish on this emerging market’s prospects and its exchange traded funds (ETFs).
Economic Times reports that the IMF has forecast 7.8% growth for India’s economy in 2011, upping its outlook by 0.5%. What led to the more optimistic view?
- India has shown a strong domestic recovery, bolstered by stimulus packages.
- The economy grew 7.9% in the third quarter of 2009 and 6.7% in the fiscal year ending March 2009, says Kartik Goyal for Bloomberg. [6 reasons to watch India.]
- The government is working to stamp out inflation without injuring the economic recovery efforts by increasing the reserve requirements for the country’s banks. Interest rates have been left unchanged, says Heather Timmons for The New York Times.
With all that growth comes more ETF opportunities. The Securities and Exchange Commission (SEC) has recently received applications from Emerging Global Shares and Goldman Sachs for registering ETFs focused on India. In addition to diversified emerging markets funds and BRIC ETFs, which generally make a significant allocation to Indian equities, the number of ETFs that invest exclusively in India’s stock market is on the rise, says Deeptha Rajkumar for Economic Times. [India also helps spur gains in the auto and commodity industries.]
According to conservative estimates, around 25-30% , or $5-6 billion, of the net secondary market flows into Indian shares in 2009 was via the ETF route. [Why should investors watch India's ETFs?]
For more stories about India, visit our India category.
- PowerShares India (NYSEArca: PIN)
- WisdomTree India Earnings (NYSEArca: EPI)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.