Emerging Markets: India
“There is a lag between the actual growth which is currently taking place in these countries and the time western investors actually come to realize this fact”
By Kedar Rindani, Partner Blogger
It is not until recently that the word “BRIC” has become popular amongst the business community. Fuelled with their headline growth, the economies of Brazil, Russia, India and China have grabbed headlines in media all across the world, and respectively so.
North American investors have started taking interest in investing in these countries either through direct investment in the equities markets or through western companies who have strong presence there. In a recent article in the Financial Times, the foreign investment inflow into these countries is over $3 trillion USD so far in the year, the highest ever.
I have never experienced such a drive, optimism and dedication towards a purpose which is surely going to be the drive the economic growth and sustain it in the long run
Since investing is all about timing, it is important to realize the potential investment opportunities within these countries early on so that as an investor you can realize the highest return on their investment. I strongly believe there is a lag between the actual growth which is currently taking place in these countries and the time western investors actually come to realize this fact. As an intelligent investor it is important to be ahead of the curve and not to jump on the bandwagon – which by then only expensive investments will be available.
A good example would be the Standard Chartered bank, which has the most exposure to the Asian economies. Due to the financial crises, the North American financial institutions were surviving on life lines offered by its government, Standard Chartered on the other hand was profitable because the their exposure to the Asian consumer.
Having an Indian background, and extensive experience dealing with the Indian business community I am very impressed by what I see in India and the future potential of the country. Fundamentally speaking, it is very important to understand the difference between the nature of the business in North America and India. The average North American consumer makes purchases everything from electronics to even cup of coffee on credit while the average Indian consumer purchases from their savings. Until recently, even homes and big ticket items such as cars were purchased from savings and therefore the growth is fueled from the grass root level rather than a bubble as the world has experience from the recent financial crises. The implication is that the businesses have a solid consumer base which is fuelling their growth rather than credit cards.
Second major difference I have noted is the entrepreneurial sprit which is alive and flourishing with its people. I have never experienced such a drive, optimism and dedication towards a purpose which is surely going to be the drive the economic growth and sustain it in the long run. Since the population is working towards material well being which they haven’t had the opportunity to enjoy in the past due to lower living standards, there is a hunger towards financial well being. Sure the education might be lacking as compared to western standards however the business aptitude makes up for the shortage. The government is heavily investing in education and infrastructure and the benefits will be realized in the long run.
These factors are strong drivers of growth for businesses in India which is going to lead for a tremendous boom that the world has never seen before. Rather than realizing later on the potential of such investment in India, I encourage you to do research and gain an understanding of the vision that its economy has to offer. When the western media finally realizes and jumps on the growth bandwagon per say, investment opportunities might have already become expensive. Economic power has already shifted eastwards on a scale and at a speed beyond our previous experience.
By Kedar Rindani, Partner Blogger
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