India vs China; Which Market is better

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India vs China

India vs China

This article is going to be short and sweet. From mass psychology and Technical analysis perspective, China makes for a better investment than India. China’s markets are extremely oversold, and the sentiment is decidedly negative and from a crowd psychology angle, we would rather invest in China than in India. Jim Rogers seems to concur

You can’t just invest in hope. Even If reforms started coming, it may not be enough to make the markets go higher, because markets have already factored it in. If the reforms are substantial, the markets may go higher. No indication of that.

If Modi made the currency convertible, if he made the markets open to outsiders, then I would have to be back in India again. So far Modi has been doing worthwhile things like addressing some social issues—I am all for that, and that is great for a lot of people—but India needs more.

You have saved your farmers by making it illegal for foreigners to own more than five hectares—how on earth can an Indian farmer compete with an Australian farmer with 50,000 hectares? In history, India has been one of the great agricultural nations of the world—you have the land, the people, whether—God gave you everything. And then, he also gave you Delhi to mess it all up.

China’s GDP on a purchasing parity basis is now the largest in the World. India, on the other hand, is a long way from challenging the top front runners and will not be in a position to challenge China seriously at least for another century.

India vs. China; Which Market is better

Source of image: knoema.com

India vs China In terms of Investments

China makes for a better investment than India for several reasons:

The market is extremely oversold; great companies are selling for a fraction of their former prices.

The sentiment is very negative, the crowd is panicking, and crowd psychology states that you should buy when the masses are fleeing for the exits. Here are some companies in China that could make for great long-term investments, CHH, TCEHY, CQQQ, etc but patience is warranted, and do not bet the house on these stocks and or ETF’s

India vs China: New Notes Nov 2019

The GDP of India is close to $1.5 trillion. At the same time, the GDP of China is close $7 trillion. The economy of China is at least 4 times as big as the economy of India. This means that even if China grows at the rate of a meagre 1.5% and India grows at a rate of 7%, the Chinese economy would have added the same amount in output as the Indian economy would have!

Only if India can continue to beat the Chinese growth rate by a huge margin for the next two to three decades, does India stand a chance of overtaking the Chinese economy?

Inflation in India significantly higher than China

India’s GDP growth has been accompanying by runaway inflation in the country. Growth rate accompanied by inflation cannot last for a long period of time. Instead, such growth rate is indicative of the short term impetus that has been given to the economy by the monetary policy.

On the other hand, China’s inflation has been relatively stable at a negligible 0.8% for many years. This has been accomplished despite the fact that China has been recording fiscal surplus for the past many years and ideally should be reeling with inflation. To the contrary, China has established sovereign wealth funds, which invest the additional cash in foreign assets keeping the inflation rate low.

The China India comparison is therefore absurd at the moment. China is a full-fledged superpower that has begun to show signs of decline whereas India has just started rising. The path is long and uncertain and only time will answer certain questions! Full Story

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