2023-11-16 15:50:39
At the end of the 1980s, the Indian manufacturer of scooters called Bajaj had a problem: it felt like every second Indian owned one – but compared to its competitors Honda and Vespa, the solid companions, on which half the family often sat, were considered boring.
Hendrik Ankenbrand
Southeast Asia, Australia and New Zealand correspondent based in Singapore.
The market leader had an image problem, and because more and more televisions had become widespread in Indian households, the legendary company founder Rahul Bajaj had a commercial filmed, the tune of which almost every Indian who was a child or older in 1989 knows to this day: “Hamara Bajaj!” Which meant something like “Our Bajaj”; The pictures showed the scooter in the background meditating on the heights of the city, hung with Hindu flower chains, in front of the high-rise buildings of the new development district and as a faithful companion to the suit-wearing businessman.
Sevenfold increase in economic output
Anyone who could afford a Bajaj had made the leap into the middle class. The rise of today’s fourth-largest motorcycle manufacturer is the rise of India, which is also why people’s hearts warm when they hear the advertising jingle of yesteryear. The fact that Bajaj stopped producing scooters 13 years ago may hurt nostalgics. For Indians, the move was just further evidence of the impressive development the country has experienced.
Since the commercial in 1989, economic output per capita has increased almost sevenfold to around $2,400. Today Indians no longer dream of scooters, but of cars. And if you can’t afford that yet, you can ride one of the fast motorcycles that Bajaj has on offer. Over the past five years, the price of the company’s shares has increased by more than 100 percent. Since the beginning of this year alone, the increase in value has been 52 percent. And if the many optimistic analysts at banks like Goldman Sachs are to be believed, this is just the beginning. Get out of China and head to India is their call to storm the stock market in what is now the most populous country in the world.
Sell Chinese stocks and “overweight” India in your portfolio, the American bank advises in a new analysis. After all, one country is in crisis while the other is enjoying great economic growth. The average income of a Chinese person at the end of last year was $12,700, five times as high as that of an average Indian. But as every stock owner knows, the stock market is always about the future. And in the case of China it is much more uncertain than in the case of India – at least if you believe the economists.
Slowing economic growth in China
The International Monetary Fund (IMF) estimates that China’s gross domestic product will increase by 5.4 percent this year. But in 2024 he sees a slowdown and puts Chinese growth at only 4.6 percent. Because society is aging and productivity is weakening, the economy could only grow by 3.5 percent in 2028. India’s economy, on the other hand, will grow by significantly more than 6 percent in the current and next year, the fund believes. JP Morgan also cheers that this means “buy” for the stock market. Bank economists bet that the country has the best prospects in the Asia-Pacific region due to its young, hungry population.
Double-digit profit increases for large companies such as Bajaj or the car manufacturer Tata Motors are possible. The latter has increased in price on the stock market by 66 percent since the beginning of the year – and that with a price-earnings ratio of significantly less than 15, which means that a share is considered cheap.
Not all stocks are likely to benefit from the rise of the Indian middle class as much as the large corporations. Economists repeatedly criticize that the upswing in India is bypassing small and medium-sized companies. In fact, huge conglomerates like the richest Indian Mukesh Ambani’s largest private company Reliance have overwhelming market power in their traditional markets such as oil, but also in retail. Analysts have calculated that four-fifths of the profits that the Indian economy made last year were made by just 20 companies. The vast majority of small businesses, on the other hand, report making losses. It is now said that these are not very stable conditions for an emerging country.
After all, the Chinese economic miracle was not created primarily by Internet giants like Alibaba or the large state-owned companies, but by the countless Chinese who, driven by their business acumen and confidence, did not rest until they had become rich with one of their many ideas.
Hendrik Ankenbrand, Singapore Published/Updated: Recommendations: 9 Daniel Mohr Published/Updated: Recommendations: 8 Martin Hock Published/Updated: , Recommendations: 10
In India, none of this seems to bother investors. The country is currently experiencing a boom in buying stocks on credit. Attracted by platforms that use robots to significantly reduce the costs of trading, “millennials” in particular are rushing to buy stock options – in order to use so-called leverage to get as much of their country’s upswing as possible for themselves. This helps the prices, but also raises concerns about a possible slide in prices, especially abroad. The Indians themselves are in a party mood.
#India