The last time we visited, I talked about the potential for investors in the South Korean stock market. Continuing on my evaluation of the Asia Pacific region, India is another region that you may want to keep your eyes on. The country’s economy is booming, and we are seeing strong growth in industries, including the oil and technology sectors. India, with a population in excess of one billion people, is often overshadowed by its neighbor to the east, China.
But take a look at the growth… According to the Asian Development Bank (ADB), the estimate for GDP growth for 2005 is estimated at around 6.90%, in line with 6.90% in 2004. The ADB also increased its GDP forecast for 2006 to 6.80% from 6.10%.
The GDP numbers are strong and are well ahead of GDP growth in North America and Europe. And as far as the Asian Pacific region goes, only China is projected to grow at a faster clip. I believe India could be a sleeping giant on the verge of explosive economic and industrial growth.
Helping to drive the superlative GDP growth in India has been a focused strategy of federal government incentives according to the ADB. The government is committed to growth and will continue on this pathway. The ADB report also predicted that India’s GDP could rise by another 1.1% if oil trades at above $70 per barrel at the end of 2006.
In the stock markets, the benchmark Bombay Stock Exchange or the Sensex broke the psychologically 8,000 point level last Thursday for the first time. The Sensex is up 21.1% so far in 2005, which is excellent and just trials the 28% gain recorded by the Korea Composite Stock Price Index. Buying of Indian stocks has been triggered by strong foreign capital inflow.
A way of trading Indian stocks is ADRs on the NYSE, but if you want less risk, you may want to buy mutual funds or index funds that focus on India or where Indian companies represent a key portion.