HBJ Capital firmly believes on the slogan, "Believe in India, Buy India". As on today, Indian economy is not merely outgrowing the U.S. by leaps and bounds; it's also at the very epicenter of the booming natural resource markets.
So, what is unique about India, and why one should buy India?
Reason #1: India has the fastest-growing population in the world, expanding at the rate of some 16 million per year. At that rate, India's population will exceed 1.4 billion people and be larger than China's by 2030.
What's more, per-capita income in India has risen steadily over the past five years, from $285 to around $550 today. That's still less than half China's per-capita income of $1,162, but incomes are growing faster in India, at plus 8% year in and year out.
Longer-term, some studies suggest that India's per-capita income can eventually reach six times that of China. Imagine 1.4 billion people in India who on average earn six times more than their industrious neighbors in China!
Reason #2: Government investment in the country's infrastructure is soaring — jumping 9.9% from 2007. And the country needs it. Auto sales are zipping along at a 17% growth rate ... airline passenger traffic is expected to more than triple over the next five years from 14 million per annum to around 50 million.
All told, India's government plans on spending $90 billion on industrial-related projects over the next three years including ...
High-speed rail freight lines.
Power plants to supply an additional 4,000 megawatts.
Three new sea ports.
Six new airports.
12 new industrial clusters, and more.
Over the next four years, by 2012, the government plans on spending a total of $500 billion to build out and improve India's infrastructure!
Reason #3: Manufacturing now accounts for almost 30% of India's economy. When most analysts and investors think of India, they think of agriculture, textiles, and usually its famed information technology service industry, which handles the outsourcing for hundreds of U.S.-based computer hardware and software manufacturers and telecoms.
But in fact, the single largest employer in India is the manufacturing sector, which employs more than 100 million people, more than 25% of the total employed in India, and which is growing at a very healthy 8.8% clip.
Reason #4: Corporate earnings in India are growing at an astounding 35% annual rate. The 30 largest companies in the Mumbai Sensex index increased their earnings at an incredible 35% in their first quarter of this year, blowing away estimates. Revenues jumped 20%.
Of 800 publicly-traded companies, average earnings growth is a blistering 17%.
Reason #5: Private equity investors are now putting more money in India than in China. Nearly $20 billion in private equity poured into India in 2007, a 156% jump versus '06, and 34% more than went into China in '07.
Infrastructure investments account for the lion's shares of the private equity flows into India, followed by the telecom sector, banking and financial services, and real estate.
Reason #6: The ballooning Indian middle class — 330 million and growing — is spending their newly-earned money, ramping up retail sales growth that should average 13% or more for the next several years.
Indian demand for telecommunications, autos, housing, financial services, jewelry — you name it, is exploding higher.
And of course, no discussion of Asia would be complete without highlighting the fact that ...
India, like China, is one heck of an economy to bet on going forward. Not only for its growth potential, but also because of its impact on the natural resource markets. And I believe now is a great time to consider taking a stake in India, or adding to existing positions.
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