The first part of Greenberg’s column:
Narendra Modi reads the developments correctly and uses them wisely: India’s ‘problems’ (in terms of investment viability) have historically focused on the Indian mentality that supposedly suppressed aggression in general and business in particular, adherence to restrictive religions, class structure and yes, democracy for sure when it comes to China but this image is simply misleading. The Indian, no less than the Chinese, is a shrewd and industrious businessman (seeing the proliferation of Indian-owned businesses all over the world), the Indian also aspires to education no less than the Chinese (as evidenced by the number of Indian principals and lecturers at universities around the world).
India has a huge and cheap workforce that is certainly capable of competing with China and India, no less than Sinai, has high self-esteem. The only reason that has prevented (and still hinders) India from equaling the economic marvel that China has achieved has to do with democracy there and the mismanagement of the economy. What the communist government in China is capable of achieving in one order from Beijing, takes the Indian government years mainly due to the democracy and bureaucracy they inherited from the British. All of the above problems can change with proper management and a leader like Moody, with a failed background, probably recognizes the right way to turn India into a modern economic power without harming the Indian tradition he is jealous of and the economic world, with China’s help mainly, understands and loves it.
Since being elected president, 8 years ago and by trial and error, Modi has been leading India to an economic power but in the last two years and in light of all the events we mentioned he started pushing himself when he “helped” the Chinese neighbor who chose to go head to head with the US. And the largest military in the world and more importantly, the largest consumer market in the world By far. The US loves it and sees India as a substitute for China and is not the only one.
For the past two years, the column has been turning the spotlight on India as an interesting area of investment. It is true that in the last three decades it was China that attracted investment money from the developed world to the developing world and it is also true that since the late 1980s, when Chinese GDP was equal to Indian GDP, China managed to reach, in 2021, a gross domestic product 5.46 times higher. Of India but in the last two years India has managed to narrow the gap. Aliba’s forecasts India will end 2022 with 8.5% GDP growth while China will show 4.3%, “the start of a long-term trend” state experts and Western countries believe.
In 2017 and following China’s aggressive behavior in the areas of economics, trade and security, President Trump returned the US to a dialogue with Japan, Australia and India (frozen by the Obama administration) whose original goal was to stop the Chinese attempt to effectively take over the East Asian economy . The article we attached, Can India replace China as the world’s factory ?, was written in 2020 but is also true today. The trade wars, the corona, the Russian invasion of Ukraine and the supply chain crisis of which China played a significant part, have led to a situation in which India is fast becoming China’s potential replacement as a center of development, production and exports and investors believe this.
India, yet, cannot fill China’s place in the global economy, far from it. China continues to be the most important center of global value chains. Developed countries are all still dependent on supplies from China for the production of products they consume and export, but India has already become the major support provider of the information revolution, of the medical industry, entering itself into the semiconductor and automotive industries. Her prime minister recognized the potential that had suddenly developed, “with the huge investments in infrastructure we are making, education reform and most importantly the rigid regulation we inherited,” says Moody, “we can close the gaps and faster than you think” Equally important to this move is the growing American commitment to what Americans see as a deliberate Chinese attack on the U.S. economy and security.
The World Economic Forum in Davos illustrates this in a big way. As Gautam Adani, the founder and chairman of the Adani Group, the giant Indian conglomerate, said, “in the absence of some global business grants and the oppressive atmosphere in the shadow of the Russian invasion, economic pressures, etc. India has emerged as the conference’s bright spot.” Huge companies like Goldman Sachs, Blackrock, JPM and more as well as leading politicians and gurus of various kinds “revived India the conference” with over 100 companies, dozens of leading politicians and other participants.
“India, for investors in assets,” said the founder of the prestigious Carlisle Investment Fund (NYSE: CG), David Rubinstein (whose investor must not miss his interviews in Bloomberg), “has recently become more attractive than China.” A Business Standard magazine representative concluded, “India has found itself at the center of many emerging dialogues, from climate change to crypto technologies. European business leaders have eagerly sought options for trade and investment diversification and India has been seen as the best option for most, thanks to its political stability and reformist policies. “India has managed to project itself as a politically stable, economically dynamic and growth-driven investment destination.” On the bold sentence, Moody (along with the US, Japan and Australia) builds the “China Replacement” route.
We therefore reiterate that India reaches a corner in the investment portfolio and only through a basket or fund from India-focused and preferably from the leading companies. Examples? The baskets INDA, INDY, PIN or NFTY and for those who invest in the euro there is INR.PA which invests in accordance with the Morgan Stanley India Index (TRS MSCI India) which includes the large and medium companies in India and whose performance, for some reason, is better than the rest, you can see in the index. By the way, these baskets, which have lagged behind the P&S index for the past five years, are steadily narrowing the gap and since the beginning of the year, they have all beaten the index (decreased less significantly).