India: A neglected stepchild for US investors
EMFIS.COM - Why are so few US investors interested in the opportunities of the Indian stock market? The same question might have been asked in 2001 about interest in Chinese investment opportunities. At that time only very few Western investors took an interest in this trend-concentrated market.
This is despite the fact that India has shown a growth in GDP of about 7% in recent years, making it one of the fastest growing economies in the world. Maybe there is too little information in the USA about the Indian market. Or perhaps US investors still fear the entanglements of the highly-protected semi-socialist economy followed by India after independence from Britain 50 years ago? We do not know, but if you are reading this report, then you have a particular interest in this 1 billion person market.
India has been primarily seen as a country for outsourcing call centers, software and generic drugs. The country, however, offers much more. It is a huge consumer market, and is also a production location and capital market with a strong foundation. The Indian stock market has already become one of the world's top performers, partially due to the evaluations of these enterprises. Nevertheless, Indian companies are growing at a much faster rate, and thus P/E ratios close to 20 still are considered an acceptable risk. But there are other alternatives, particularly the Indian currency, which can be an excellent investment vehicle. The decline of the Dollar relative to competing currencies is accelerating these opportunities for US investors.
India builds currency reserves (about $230 billion $US), has a strong growth in GDP (about 7-8%), had a total bilateral trade with the US of $31.8 billion in 2006, and exports many products. All of these factors point to a further rise in the Indian rupee. So far, Asian central banks are usually anxious about intervening in the rate of exchange due to their export politics. Other political decisions - such as restrictions on the capital market - keep the currency low against the U.S. dollar. International pressure, however, is growing. Currently, many western politicians are worried about the strengthening of Chinese Yuan. A similar view could also be taken with India. The rupee could be traded more actively, and quickly shoot higher than past performance might indicate. Currently, the topic of India and the Rupee is not a hot topic, but it is precisely for this reason that it is a good time to be thinking about India as an investment vehicle. We from Emfis.com always advise investors to go into a market when its only on the sidelines of investors interests and then sell off with high profit when the rest of the world gets into this market.
We see a revaluation potential, which can itself be worthwhile for investors, particularly with violent movements in the stock market with the Indian Rupee. The upward trend in Asian currencies continues, and India could play an important role.
This is despite the fact that India has shown a growth in GDP of about 7% in recent years, making it one of the fastest growing economies in the world. Maybe there is too little information in the USA about the Indian market. Or perhaps US investors still fear the entanglements of the highly-protected semi-socialist economy followed by India after independence from Britain 50 years ago? We do not know, but if you are reading this report, then you have a particular interest in this 1 billion person market.
India has been primarily seen as a country for outsourcing call centers, software and generic drugs. The country, however, offers much more. It is a huge consumer market, and is also a production location and capital market with a strong foundation. The Indian stock market has already become one of the world's top performers, partially due to the evaluations of these enterprises. Nevertheless, Indian companies are growing at a much faster rate, and thus P/E ratios close to 20 still are considered an acceptable risk. But there are other alternatives, particularly the Indian currency, which can be an excellent investment vehicle. The decline of the Dollar relative to competing currencies is accelerating these opportunities for US investors.
India builds currency reserves (about $230 billion $US), has a strong growth in GDP (about 7-8%), had a total bilateral trade with the US of $31.8 billion in 2006, and exports many products. All of these factors point to a further rise in the Indian rupee. So far, Asian central banks are usually anxious about intervening in the rate of exchange due to their export politics. Other political decisions - such as restrictions on the capital market - keep the currency low against the U.S. dollar. International pressure, however, is growing. Currently, many western politicians are worried about the strengthening of Chinese Yuan. A similar view could also be taken with India. The rupee could be traded more actively, and quickly shoot higher than past performance might indicate. Currently, the topic of India and the Rupee is not a hot topic, but it is precisely for this reason that it is a good time to be thinking about India as an investment vehicle. We from Emfis.com always advise investors to go into a market when its only on the sidelines of investors interests and then sell off with high profit when the rest of the world gets into this market.
We see a revaluation potential, which can itself be worthwhile for investors, particularly with violent movements in the stock market with the Indian Rupee. The upward trend in Asian currencies continues, and India could play an important role.
