The search for economic growth never ceases. Instead, it surges toward whatever appears to be the next and most promising frontier for smart investors. For that, we are loving emerging markets.
When you consider all the factors that we look for in an attractive investment opportunity for the long-term, one country currently reigns supreme. In our review, we prioritized political stability, robust domestic AND international markets, friendly terms with the Western world, pro-growth government policies, and local conditions that are favorable for business. Standing tall and vibrant now is the great democratic nation of India!
We are downright bullish on India at the moment, and it shouldn’t be hard to see why. Let’s break it down:
Government Policies: India’s government is playing the game with smarts by offering increased tax rebates based on increased production. In addition, they require all multinational corporations operating in India to manufacture in-nation no less than of 30% of the cost of the goods they are selling domestically. This keeps the manufacturing sector busy and thriving.
Geopolitics: Global tensions between China and Western nations have placed new pressures on multinational companies to diversify risk factors and establish manufacturing operations in…. where? You guessed it! India! We predict that the demand will outpace supply in years to come, meaning huge opportunities for businesses to expand and optimize.
Local Market with Purchasing Power: India benefits from a burgeoning middle class packing a big punch when it comes to spending. Due largely to the outsourcing boom of the early 2000’s, local markets can cater to a young demographic (where more than 50% of the population is under the age of 50) and an educated, English-speaking middle class with disposable income.
Access to Cheap Labor and Raw Materials: Businesses with operations in India have access to a large pool of relatively cheap labor, a stable government, and an economy that is humming along while remaining insulated from the recessionary pressures currently faced by Western economies.
With all that this emerging market has going for it, no one should be surprised that India’s stock market was the highest-performing market in the world through the first six months of 2023. And it’s not a fluke. We expect this trend to continue for the next few years.
Yes, we are bullish on India, but we’re not blind! There a few risk factors that must also be weighed. First, 2024 is an election year for India and we will be watching which way those winds blow quite closely.
Investors keen to participate in India’s growth story may think themselves quite clever to use emerging markets EFT’s and EFT’s with a specific India focus. But they should also be cautious of contango risks and inherent risks in currency.
The safest and smartest way to get in on the ground floor of India’s emerging market is to invest directly in the shares of undervalued Indian companies or in private Indian companies that are poised for high growth.
We tend to favor companies with the following attributes:
- They have a competitive edge by way of disruptive technology, intellectual property, or patents, and operate in niches with high barriers to entry – OR –
- They are well-established, with a sizable market share of proven products or services, a competitive edge, and a strong global customer base – AND –
- They are led by experienced founders with a track record of integrity and sound management. This is an essential ingredient to success that should never be overlooked by investors.
For the next great frontier in investment opportunities and economic growth, look no further than India. All the signs are there and, with the right strategy, possibilities of positive long-term gains abound.
