Investors Diary

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Monday, August 13, 2007

Chindia- The Emerging Economic Clout

Today i was feeling 'global' and thought why not check the other world economies and the influence on our stock market as well as other emerging markets. Upon extensive research i realized that some of the top four rapidly expanding economies have a bearing on our Sub Saharan developing economies.

G8: Alongside the other developed countries of the G8 with massive economic clout and global political influence China, India, Russia and Brazil are attracting massive Foreign Direct Investments. This new influence by China and India is what i would call Chindia.
India was one of the world's poorest economies when it won its independence from Britain in 1947. Incredibly, 60 years later, the country's emerging economic clout has made it Asia's top spot for billionaires.
India's emerging economic clout: This has made it Asia's top spot for billionaires with its 40 richest businesspeople worth a collective $170 billion, up from $106 billion last year, according to leading American business magazine Forbes.

India's Stock Market:
India's hot stock market, up 39 per cent this year, and its robust real estate market helped swell most fortunes. In the last three years, the Bombay Stock Exchange's benchmark Sensex index soared from 6,000 to more than 15,000 recently.

Indian Billionaires: The collective wealth of Indian billionaires jumped six fold from $32 billion to $191 billion in that time. The notable 2004 elimination of capital gains tax on the sale of equity shares, encouraged entrepreneurs to list their companies.

Rising Stocks: If the stock market keeps rising, the tide of good fortune will continue to create many more of the newly rich.

Corruption: Now that India is playing a larger role in the world economy the issue of corruption in public and private sector is slowly coming to a sharp focus. One wonders however whether corruption will slow growth or growth will slow corruption. [More].

The last two decades has seen the emergence of new and rapidly growing world economies that are slowly emerging as the top and fastest growing economies with good investment prospects for foregin investors.
The Chinese economy grew at 11.9% in the last quarter and could probably be growing at its fastest in 12 years.

China's Quality Fade:Despite the increased net exports of the Chinese Exports to Africa, America and other markets, there have been increasing concerns of quality fade in most of its products branded made in China.

China stock market:
Chinese shares have continued rising at a breakneck pace, pushing Shanghai's main stock index through the 4,000 mark for the first time in May 2007. Shanghai's benchmark CSI 300 index had closed up 2.6% at 4,090.57. The index has doubled in value this year and quadrupled since the start of 2006.

China's stock markets: The markets are almost going mad, actually, with the leading Shanghai market continually rising as ordinary Chinese flock to buy equities in breathless, record numbers. The bull market is so dramatic — the Shanghai index has hit record highs with slight falls on the way as others warn againstt "blind optimism." and "Irrational exuberance."
College students, yuppies, retirees and others are buying individual shares or investing in China's swelling mutual funds.

Along with China, India and Russia, Brazil is a country overflowing with opportunities to attract foreign capital. Brazil is the leading the way in Latin America’s economic development. In 2006, it was the 3rd largest economy in the western hemisphere and the 11th largest in the world. The economy has stabilized, the legislative reforms of the Lula Da Silva government are boosting cooperation between the public and private sectors, imbalances are improving, and the high valuation of markets is attracting the attention of foreign investors.

Brazilian Stocks:
Barely four years ago, the largest Latin American stock markets were on the black list of investors in emerging markets. The economic crisis in Argentina, along with the arrival of Lula as president of Brazil. Now, the Brazilian currency, the real, as well as the country’s stock market are both at all-time highs.

“If you want to be in Latin America, you have to be in Brazil,” notes Rafael Pampill√≥n, professor of economics at the Instituto de Empresa business school in Madrid.

Emerging Economy: Because Brazil is an emerging economy, there are many sectors where investors can make the most of the gold mine contained in Brazil’s economic develop

Stock Market Appeal:
For more than 20 years, Brazilian capital markets were characterized by protectionism and underdevelopment. Following the improvement in the economy, capital markets began to modernize. Lately, Brazil has been benefiting from a favorable external environment. On a global level, it has significant liquidity. In a broad range of financial markets, prices have risen at a brisk pace and the country has growing economic ties with developed economies.More...

Global Markets Calm:
Despite the calm down, investors are bracing themselves for fresh stock turmoil in the coming week after riding a roller-coaster on world markets in recent days, amid fears that US home loan woes could trigger a credit crunch.The pumping of tens of billions of dollars by central banks in US, EU and Japan into the markets on Thursday and Friday helped to ease the panic and stave off fears of a global economic crisis.

The short-term money markets have also eased after efforts by central banks to keep money flowing through the system. [More]

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