Forex Trading – Why Now’s The Time To
Profit In India
The Dynamic Wealth Report
September 15, 2009
How You Can Profit From India...
by Brian T Mikes, Editor
Investors are once again turning their attention overseas. The US Dollar
is crumbling in value. And, the global recession appears to be near an
end. While the US markets are up nicely, it’s nothing like the returns
we’re seeing overseas.
One area of hot growth before the recession was India.
Smart investors riding this red hot economy were making money hand over
fist. From 2003 to 2006, the market tripled in value… then doubled in
value again in less than 18 months.
Investing in India’s like throwing gasoline on a backyard BBQ. It’s
spectacular and scary all at the same time.
Risk taking is catching on again.
Investors are looking for big returns. India’s showing some interesting
economic data. The Bombay Sensex is up 68% year to date.
Some think India looks like a great place to invest… could they be
right?
India is one of the fastest growing economies in the world. Just look at
their GDP growth over the last few years.
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In 2005, it was over 7%.
GDP growth was over 9% in 2006, 2007, and 2008.
But, the country is estimating 2009 growth around 6%.
Should we be worried?
While any slowdown in economic growth gives me pause, remember
investing in everything is relative. What do I mean by that? Simply,
looking at numbers in a vacuum is worthless. We need to know how these
GDP numbers compare to others.
For example, the US GDP estimates for 2009 are downright sad. Right now,
estimates for the US are for a contraction of nearly 2%. The UK, and EuroZone are also estimating negative GDP rates for 2009.
Taken in this context, India’s GDP growth rate is downright amazing.
So, the drop in India’s GDP doesn’t scare me.
What scares me is runaway government spending. The Indian government
recently announced a $210 billion budget. A lot of it is earmarked for
social welfare programs. It increases total spending some 16% from the
prior year.
It also increases the federal deficit to the highest levels in 18 years!
I’m not alone in my fear. The day the budget was announced, the Bombay
Stock Exchange fell 5.8%. Clearly, Indian investors are also concerned.
There’s also another problem with India.
No one seems to know what the government’s stance is on international
investment.
Right now is a critical stage in India’s development. They need to open
the country to more international investment. They need to attract
corporations and encourage expansion into their country. Without it,
growth rates will slow.
This is an important unresolved issue… but not the only one.
India also has problems with their sovereign debt ratings. When the
budget was announced, several ratings agencies started looking closely
at India’s debt. If these debt instruments get downgraded, we’ll see
money flow out of the country.
Clearly, investing in India’s not a slam dunk.
India’s economy is growing fast… but problems with debt ratings,
government budgets, and international investment have some concerned.
Personally, I think the potential rewards are worth the risk. One easy
way to capture the growth in India is with a country ETF. The iPath MSCI
India Index ETN
(INP) offers broad exposure. It’s comprised of 60 leading Indian
companies.
Since the lows set in the first quarter, INP is up more than 100%. This
is a great return but it still has more room to run.
I happen to also like the Indian currency – the Rupee. I think it’s
poised for a big move higher. Savvy currency investors should look
closely at this opportunity.
***Editor’s Note: Earlier today, Brian launched his new
currency ETF
service. It’s a great way to cash in on the world’s currency market-
without the expense or risk of options and futures. You can read all
about it here…
Grand Canyon Education went public in November raising over $120
million. Today they announced the sale of another six million shares. All
of these come from management and the big shareholders. Not a good sign
if you ask me.
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