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Flying Under the Radar, India Stays Out of US Spotlight

By Ashish Advani   |   Wednesday, 15 Sep 2010 11:51 AM

If you receive your investment advice and cues from your local TV-news channel, a cable-TV business-news channel or just the word on Wall Street, you are missing the boat.

The best opportunities are where the majority of the herd isn’t flocking to, at least just yet. Today I will tell you what the news media isn’t talking about.

But let’s start with a pop quiz:

Raise your hand if you know why we are having a great rally this week in all sectors except stocks and the U.S. dollar.

If you answered: “China’s recently announced IP data,” then give yourself a big hand.

What is this great IP news? Come sit with me while I tell you this story …

Last Friday, China announced its IP, or industrial production, numbers for August. Industrial production measures the level of industrial activity in a country. China announced that its IP expanded by 13.9 percent year over year (YoY). This means that their production is growing at gangbuster rates.

And when China is producing at such rates, there is one of two things happening.

Either their exports (U.S. imports) are great (for example, U.S. domestic sales are roaring), or there is a large ongoing effort of restocking inventory. In this case, while the U.S. retail sales for August were slightly higher, it wasn’t data made for legends.

This means that China is working at restocking America for the upcoming Christmas season. Given that jobs won’t recover by then and the growth rates will continue to remain tepid in the United States, this spurt in China can’t last long.

But the markets — commodities, currencies, treasuries — are all partying as if the global downturn is over.

Folks, don’t get me wrong. The China growth story is a great one. I will teach you how to invest wisely in China as well. I participate in that market and have made a good solid return over years. And the fundamentals are strong in China.

The point I am making is that China depends on exports tremendously, and that is fraught with challenges when the globe faces slowdown and recessionary period, as right now.

So, what is the U.S. media not talking about?

We still stay with the industrial production story, but switch countries.

The IP data for India was also released last Friday. And the growth was nearly the same at 13.8 percent YoY growth. Yet, no one mentioned it here as the cause for optimism.

No one talks about India, as much as they speak about China.

You see, the United States is obsessed with China. If we can ever look past China, we will see some trends that will help develop a wholesome investment portfolio.

The Indian IP story has much stronger undertones that are bankable.

India is growing at similar rates as China. Yet, China depends on exports heavily – China exports more than 50 percent of its production. India consumes nearly 85 percent of its production.

So India’s growth signifies “internal growth.”

But it is a story that is less reliant on the U.S. continuing to do well. And that, my dear reader, is where real stories and bankable investments come in …

Since Friday was a trading holiday in India, (Eid Celebration, a Muslim festival. Interesting fact: India is largely Hindu. Yet India has the highest number of Muslims in any one country, nearly 140 million Muslims) the Bombay Stock Exchange lit up on Monday and Tuesday gaining about 2.2 percent during the two trading days so far.

And people in the know agree that this news is a far more sustainable story than waiting on the U.S. recovery and exporting into that.

Personally, I am happy that India continues to fly under the radar and not gain attention in the United States.

A wise investor will follow this “internal consumption” story in more detail, and invest wisely in the appropriate sectors in India as a positive enhancement and true diversification strategy.

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If you receive your investment advice and cues from your local TV-news channel, a cable-TV business-news channel or just the word on Wall Street, you are missing the boat. The best opportunities are where the majority of the herd isn t flocking to, at least just yet....
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2010-51-15
 

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