Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Bubble Drivers, Crypto Exit Strategy During Musk Presidency - 27th Dec 24
Gold Stocks’ Remain Exceptionally Weak Even as Stocks Rise - 27th Dec 24
Gold’s Remarkable Year - 27th Dec 24
Stock Market Rip the Face Off the Bears Rally! - 22nd Dec 24
STOP LOSSES - 22nd Dec 24
Fed Tests Gold Price Upleg - 22nd Dec 24
Stock Market Sentiment Speaks: Why Do We Rely On News - 22nd Dec 24
Never Buy an IPO - 22nd Dec 24
THEY DON'T RING THE BELL AT THE CRPTO MARKET TOP! - 20th Dec 24
CEREBUS IPO NVIDIA KILLER? - 18th Dec 24
Nvidia Stock 5X to 30X - 18th Dec 24
LRCX Stock Split - 18th Dec 24
Stock Market Expected Trend Forecast - 18th Dec 24
Silver’s Evolving Market: Bright Prospects and Lingering Challenges - 18th Dec 24
Extreme Levels of Work-for-Gold Ratio - 18th Dec 24
Tesla $460, Bitcoin $107k, S&P 6080 - The Pump Continues! - 16th Dec 24
Stock Market Risk to the Upside! S&P 7000 Forecast 2025 - 15th Dec 24
Stock Market 2025 Mid Decade Year - 15th Dec 24
Sheffield Christmas Market 2024 Is a Building Site - 15th Dec 24
Got Copper or Gold Miners? Watch Out - 15th Dec 24
Republican vs Democrat Presidents and the Stock Market - 13th Dec 24
Stock Market Up 8 Out of First 9 months - 13th Dec 24
What Does a Strong Sept Mean for the Stock Market? - 13th Dec 24
Is Trump the Most Pro-Stock Market President Ever? - 13th Dec 24
Interest Rates, Unemployment and the SPX - 13th Dec 24
Fed Balance Sheet Continues To Decline - 13th Dec 24
Trump Stocks and Crypto Mania 2025 Incoming as Bitcoin Breaks Above $100k - 8th Dec 24
Gold Price Multiple Confirmations - Are You Ready? - 8th Dec 24
Gold Price Monster Upleg Lives - 8th Dec 24
Stock & Crypto Markets Going into December 2024 - 2nd Dec 24
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

India vs China Economic Growth Potential

Economics / Emerging Markets Feb 27, 2010 - 02:28 PM GMT

By: Charles_Maley

Economics

Best Financial Markets Analysis ArticleFrom the Vedas we learn a practical art of surgery, medicine, music, house building under which mechanized art is included. They are encyclopedia of every aspect of life, culture, religion, science, ethics, law, cosmology and meteorology – William James, American Author

There is always a lot of talk about China, and how they will be the great nation to help out, or perhaps solve all the world’s problems in the years to come. There are many different views on the nearer term prospects for China. Is the rapid growth sustainable or are they heading into a bubble that could burst? Is the Yuan going to continue to be tied closely to the Dollar or are they going to let it float a bit wider to dampen the over stimulated economy?
 
The opinions range from Jim Rogers who thinks they are the next dominant force of the world, to Jim Chanos who thinks they are on the brink of collapse. Chanos, who is most known for shorting Enron, compared the credit expansion in China to the U.S. subprime market, and the housing boom before they went bust.
 
In any event, I thought I would share a few thoughts about another China like contender.
 
The Pulitzer Prize winning author Will Durant once said, “India was the mother of our race, and Sanskrit the mother of Europe's languages. She was the mother of our philosophy, mother through the Arabs, of much of our mathematics, mother through Buddha, of the ideals embodied in Christianity, mother through village communities of self-government and democracy. Mother India is in many ways the mother of us all."
 
I found it interesting that in the Barron’s roundtable, no one mentioned India as a place to invest long term; After all they are the second largest country in the world (over a billion people) in terms of population, growing at around 8% per year, with a staggering 50% of the population under 25 years old.
 
India has also implemented a whopping $500 Billion dollar plan to build and upgrade it’s infrastructure of highways, airports, and transportation, and have a goal of completion by 2012.
 
I would think the infrastructure build out, and the population distribution alone, would bode very well for some industries. With a half a billion people under 25 years old, certainly they will be interested at some point in a cell phone, and driving a car. (If they are anything like Americans)
 
In fact, according to a paper written by Marc Faber it’s already happening. “In the year to March 2009, India added 125 million mobile phone subscribers, and whereas Indian auto sales are tiny compared to China’s vehicle sales (running currently at an annual rate of over 12 million units and up over 90% year on year), they are nevertheless up 39% year on year, with an annual rate of 1.6 million sales.” 
 
 
Faber also pointed out in his research “India’s middle class is estimated at 170 million (half the population of the US), and the country has one of the lowest vehicle-penetration rates in the world. Given that India also has one of the youngest populations – half of its 1.1 billion-plus people are less than 25 years old, compared to 42% in Brazil, 36% in China, and less than 30% in the developed nations – car sales will undoubtedly continue to soar in the next few years.
 
In this respect, we should also take into account that India’s population will continue to grow rapidly and will exceed China’s population before 2030. McKinsey estimates that by 2025, India’s middle class (households with disposable incomes of from 200,000 to one million Rupees a year) will increase to close to 600 million people, or more than 40% of the population.”
 
If that growth estimate is somewhat accurate, 600 million people in the middle class equals approximately two America’s with middle class purchasing power.
 
Faber points out “This is not to say that India is free of problems. Its rapid population growth will be challenging. India’s land mass is only a third that of China or the United States, yet its population will exceed 1.4 billion in 20 years’ time. With close to 20% of the world’s population, India has just 4% of the world’s water resources and is likely to suffer in future from water scarcity.”
 
“I should stress that I am far from certain about current stock prices providing an ideal entry point; however, given the country’s size and economic potential, investors who either have no exposure to India’s economy and vibrant corporate sector or are massively underweight Indian stocks should gradually become more involved in this promising country.”
 

Whether Rogers’s assessment turns out to be correct or Marc Faber’s view comes to pass, there are problems in China, and I’m sure you will see some similar problems in India. On the other hand, it looks like India should not be overlooked for long term investment anymore than China, especially in sectors that will benefit from such a young and growing population.

Enjoy this article? Like to receive more like it each day? Simply click here and enter your email address in the box below to join them. 

Email addresses are only used for mailing articles, and you may unsubscribe any time by clicking the link provided in the footer of each email.

Charles Maley
www.viewpointsofacommoditytrader.com
Charles has been in the financial arena since 1980. Charles is a Partner of Angus Jackson Partners, Inc. where he is currently building a track record trading the concepts that has taken thirty years to learn. He uses multiple trading systems to trade over 65 markets with multiple risk management strategies. More importantly he manages the programs in the “Real World”, adjusting for the surprises of inevitable change and random events. Charles keeps a Blog on the concepts, observations, and intuitions that can help all traders become better traders.

© 2010 Copyright Charles Maley - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in