India will never Dethrone China
India has had many aspirations to overtake china, but we continuously stated this nothing but a dream. India’s corruption makes China’s corruption seem non-existent. Add in the stench, and filth one has to deal with in parts of Mumbai and Delhi, and the allure of investing in India loses its appeal rather rapidly. This is the reason India continues to suffer such a massive amount of brain drain. Smart Indians understand that their best option to seek greener pastures. Modi’s government had the strongest mandate of any government, yet like all his predecessors he seems to be scratching his backside more than trying to implement any noteworthy changes.
The first thing he should have done was streamline the investment process, make it easy to dam it for foreigners to invest. With foreign investment comes a plethora of jobs; instead he continues to chant the same old song of change while marching to the drumbeat of no change. India will never catch up with China at least not in this century. This century belongs to China and the world recognises this. No one flinches when Indian markets are taking but if Chinese markets tank or there is some bad news coming out of China the world’s financial markets react and in most cases the reaction is usually very strong. From a mass psychology perspective, this tells us that the financial markets recognise China as the de facto leader and India if it’s lucky might manage to hold onto some position in the top 5. If you are investor forget about India taking out china, it will not happen anytime soon. Some Indian companies are still worth investing in and one should wait for strong pullbacks before coming money into any of these stocks.
We are going to list a few of Jim Rogers recent quotes as he seems to wholeheartedly share the same sentiment
As an investor, after almost a year-and-a-half, have decided to move on to other places, partly also because stock markets are not going to be particularly good for the next year or two.”
You can’t just invest on 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.
And if I am going to be at some place, I would rather be at a market that is either depressed or where dramatic changes are taking place. The India market is not depressed. If markets all around have problems, it is going to impact India, too.
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, weather—God gave you everything. And then, he also gave you Delhi to mess it all up.”
Jim Rogers is so negative on India that he has stated that he is shorting. We are not sure that is the way to go but then again he has boatloads of money so if he loses a million or two it’s not a big deal as he spread his investments around. It is noteworthy that he seems to agree with us and favours investing in China and Russia as opposed to deploying cash into American or western financial markets.
Game Plan
Use strong pullback to add to your positions in Key Chinese and Russian companies. Some examples are VIP, NTES, BABA, CHL, etc.
Other stories of interest:
Gold breakout real or another false start (Feb 15)
Next American Disaster is Student Debt (Feb 12)
Central bankers embrace Negative interest rate wars (Feb 10)
Gluttonous colleges fueling higher education bubble (Feb 8)
One chart clearly illustrates coming student debt crisis (Feb 7)
