Saturday, May 24, 2008

Suddenly Cheaper, Indian Market Beckons

It is my belief that Brazil and India will be the two most powerful countries in the world in 2050 or so. Too late for me to see my theory proven or disproved, of course. This article from Barron's is about India.

's Bombay Stock Exchange Sensitive Index, or Sensex, has dropped roughly 25% this year, bringing its overall 12-month price-to-earnings ratio down to about 21 from its stratospheric 31 in 2007. In comparison, China's Shanghai Stock Market Index has a trailing P/E of 28 times earnings, despite its recent selloff. India's expected to have an estimated 8% growth in gross domestic product this year, while China's estimated GDP growth will be around 9%.

My India fund has been walloped, but my view of India is long-term, and in th elong term I believe it is going to boom.

makes up 2.0% of global market value, or $800 billion of a $40 trillion total, according to Siracusano [director of research at WisdomTree]. That's up from just 0.2% in 1989. "The world's changed, and people's investing patterns should change with it," he says.


Some predict India's economy will be larger than the U.S.' s by 2050. Its population is expected to eventually top China's.

What I think favors Brazil is that it has its own oil. But India is going to be a dynamo.

One other virtue India has that China doesn't: It's a democracy. Who knows how China's banks may have been hit by the subprime mortgage meltdown that has hurt the global economy? We likely won't hear about any problems until after the Olympics this summer.

Good reason to get out of China, very soon.

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