To mark the launch of the first physically replicated Indian ETF in Europe*, issuers First Trust put together a few bullets to remind investors that the long term case for India is still very strong.
- 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
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