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:

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].

China:
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.

Brazil:
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 Pampillón, 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]

East African Tiger?

Economic Survey

The recent economic survey released by the Central Bureau of Statistics (CBS) in collaboration with the Ministry of Planning and National Development reveals that the global economy continued expanding in 2006 with economic activity in most regions exceding expectation. The global growth recorded a rise of 5.1% in 2006 mainly boosted by robust growth in US, Euro Area and China.

Oil prices continued to rise with metal prices being driven mainly by the high demand in the emerging Asian markets.The Sub Saharan Africa region experienced the strongest period of the economic expansion since 1970s with 5.2% growth which is projected to increase to 6.3% in 2007.

Real Gross Domestic Product

GDP expanded by 6.1% in 2006 compared to 5.7% in 2005, 5.1% in 2004, 2.9% in 2003 and 0.5% in 2002. The growth was boosted with agriculture and Transport and communication being the main source of growth.

Over these few years of the NARC administration the economy has grown marginally with further projections of even better growth in the next decade. It is worth noting that the economic projections for the 2007/2008 is expected to near the 7% mark if all macroeconomic variables at play continue being stable as the major economic drivers realize increased activity.

With this in mind i was left wondering whether Kenya will one day realize such spectacular growth as was witnessed within the Asian economies that came to be know as the Asian Tigers.

The Tigers

This term was coined in reference to the economies of Hong Kong, Singapore, South Korea and Taiwan. These economies were also known as Asia's Four Little Dragons and were noted for maintaining high growth rates and rapid industrialization between the early 1960s and 1990s. In the early 21st century, with the original four Tigers at or near to fully developed status, attention has increasingly shifted to other Asian economies which are experiencing rapid economic transformation at the present time which include India, China, Japan, Indonesia and Phillipines amongst others.

East African Tiger?

With the foregoing spectacular growth of many economies in East Asia over the past 30 years which amazed many professionals i wondered whether some day Kenya will realize such no mean stature. With the current upgrading of Kenya in the world map from the Least Developed Country (LDC) to the Developing world status might be a sign of good tidings to come and a step in the right direction. The Kenyan economy has realized significant activity in Agriculture with alot of Investments by both local and foreign investors has also been boosted the transport and commucation infrastructure showing signs of further growth. Transport and Comunication, Business Process Outsourcing (BPO), Information Technology etc.

Vision 2030

I believe that with the launch of the vision 2030 by the government Kenya is so close yet so far to becoming a nation to reckon with interms of the world economic muscle. However alot of things have to be in place if Kenya is to go down the road of economic prosperity with the three vision pillars of Economic, Political and Social being at interplay. It is neccessary to provide a conducive environment for Foreign Direct Investments (FDI) in industrial production/manufacturing, agriculture, business process oursourcing, financial markets/money banking and finance, technology, infrastructure, mobile telephony, transport and communication, tourism, energy, building and construction etc.

The vibrancy of the Kenyan stock market is notable and with further listing of more companies in this bourse investors across the global divide will stream in to invest in the country. Correspondingly, corporate governance within most corporations will be enhanced greatly as the watchful eye of the Capital markets and the Nairobi Stock Exchange keeps them in check. The capital market activity in recent times is much touted to spur economic growth leading to eventual development that would propel us to be an economic TIGER.

I HAVE A DREAM!