Emerging Market’s will power the world economy in 2008, so let’s not wait to invest

BRIC economies of Brazil, Russia, India & China will represent the major growth in world economy. China tops in actual returns for 2007 with the Shanghai Composite Index returning around 80% followed by Indonesian Composite Index with 52% and India’s Sensex with 45%. Concerns on valuations remain in China and some analyst expects Chinese markets to correct as the valuations seem to be very much stretched.

On the other hand in India the valuations are justified by higher earnings growth and strong fundamentals. India also looks attractive to lot of analyst as the domestic demand is increasing and their reliance on US is decreasing. Indian economy is less susceptible to the happenings in the world economy & has increased the trade among other developing nations and with Europe.

S&P believes the bull market in EM equities has further to run and the EM equities should represent a core, long-term holding in U.S. investor portfolios which will make sure that the local EM markets will grow whatever happens with the the big daddy of the world economy, US.

Analysts are contemplating that US might move into stagflation where growth stagnates and prices increase. This will make sure that lot of investor’s portfolio will be skewed towards the EM markets and money flow to these economies will increase making the EM markets and the local currencies to soar. Year-to-date through Oct. 5, $14.8 billion in new cash entered emerging-markets equity funds, vs. an inflow of $2.8 billion for all of 2004, according to EmergingPortfolio.com.

So are we still waiting for the markets to correct here in India???

I have always been of the view and have been advising my clients to take the mutual funds route to investments and be a regular investor.

A CRISIL study reveals that investments in mutual funds (MF's) have delivered higher returns, at relatively lower risk levels, in comparison to market indices across various time periods. CRISIL believes that MF investments present a rewarding proposition for retail investors to partake of the benefits of long-term investing. (Source http://www.crisil.com/index.jsp )

I believe in making a good and stable portfolio which as per me should contain a max of 8-9 Eq mutual funds with a correct mix of large, mid and small caps with a pinch of value, contra & dynamic funds added with systematic investment plans (Sip’s) to stabilize the portfolio and give that extra kick.

As I always say lets Invest…

(For opinions on portfolios send mail to sureshkaimal@gmail.com with subject opinion required)

Comments

  1. Realty RiderJune 25, 2008

    India is beginning to make news worldwide. It’s just the right time to think India. There's a new sense of confidence in Indian business. This confidence arises from the growing success of Indian enterprise in the face of competition in an increasing number of sectors. The India growth story is going stronger than ever. Favourable demographic and psychographic changes relating to India’s consumer class, international exposure, availability of quality retail space, wider availability of products and brand communication are some of the factors that are driving the retail in India. Real estate consultancy Jones Lang Lasalle Meghraj has identified 50 Indian cities that are likely to witness most of the retail action over the next couple of years — both in terms of development of malls and advent of organised retailers. And Jaipur, Lucknow and Kochi find mention among cities poised for “high growth.The world is now looking at India as the nation of the future. More significantly, India is well on its way to emerging as a first-world economy in the fields of information technology (IT), biotechnology, pharmaceuticals and the automotive sector, pushing the thrust now on to the retail sector to facilitate the creation of a new surging modern India. The real estate boom in India will not only propel the economy to sustainable heights, but will also generate employment for several millions. It is strongly expected that the growing Indian economy and growing opportunities will ensure that the foundation is laid for India's tryst with destiny and for it to be fully integrated into the world economy.For more view- realtydigest.blogspot.com

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