New India Launch

Fri 23 Sep 2016

By Brian Dennehy

Access Level | public

Investment research

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  • India has a large, growing middle class. By 2050 it's predicted to have grown by 70%. In contrast, China's working age population will actually have fallen by 9%, a side-effect of the one-child policy.
  • India is predicted to be the third largest economy by 2030, with a GDP of 6.6 trillion USD. Behind the US (24.8) and China (22.2) but just ahead of Japan (6.4).
  • The share of services in India’s GDP has steadily increased over the years and is at 57.03% with agriculture’s share dropping to 15.79% as of 2013-14. 
  • The country is in a much better position to deal with global volatility, possibly triggered by US rate rises e.g. foreign exchange reserves are close to all-time highs, making the country less dependent on hot money from overseas
  • Indian companies like Infosys, Reliance and Tata have been upgrading their earnings by around 10% or more.  This is in stark contrast to much of the rest of the world e.g. the US
  • India remains a growth bright spot for investors e.g. 7-8% is way ahead of China let alone the developed economies of the US and Europe, which are stagnating. 
*LAM ZyFin MSCI India UCITS ETF.  Physically replicated means buying the underlying stocks rather than use derivatives to try and mirror those stocks.
 
ACTION FOR INVESTORS 
 
  • Consider holding some emerging market exposure in your portfolio, India in particular
  • Look for longer term trends...
  • ...such as young populations and low debt levels
 
FURTHER READING 
 

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