Banyantree Investment Group growth says India has all the elements for long-term growth
\nIndia has just hit that US$2000 GDP per capita mark, typically an inflection point for any economy
\nFor strong growth fiscal and monetary policy must support prosperity flowing through entire population<\/p>\n
For many Australians, India conjures images of a land steeped in ancient history and vibrant culture, while the two nations share a long history of cricketing rivalries and camaraderie.<\/p>\n
Indian cuisine has made a significant impact on Australian palates, while India has also been growing its strategic position in the Indo-Pacific region and becoming more known for its economic and political clout. It is a founding member of the BRICS bloc of developing nations and is current chair of the G20.<\/p>\n
According to the World Economic Forum (WEF)<\/a> 2023 saw India overtake China as the country with the world\u2019s largest population and was this month represented at Davos 2024, the annual meeting of the WEF in Switzerland.<\/p>\n Furthermore, the United Nations Development Programme<\/a> says India saw a \u201cremarkable reduction in poverty, with 415 million people exiting poverty within a span of just 15 years (2005\/6\u201319\/21)\u201d.<\/p>\n Banyantree Investment Group<\/a> investment manager and director Zach Riaz has been bullish on the emerging nation for several years.<\/p>\n \u201cEmerging markets are so big and vast with different economic and growth drivers, monetary and fiscal policies, nuances and different levels of risks,\u201d he says.<\/p>\n Riaz says emerging markets are always touted for their potential growth and return on equities but over the long-term have tended to lag developed market returns.<\/p>\n \u201cYou have to break down emerging markets and very specifically which emerging market to go in picking out the best,\u201d he says.<\/p>\n India was one that the research and investment house flagged along with Brazil and China.<\/p>\n \u201cIndia is one of the biggest markets from a population perspective and back then it wasn\u2019t one of the biggest drivers of the emerging markets index and it was more China,\u201d\u00a0 he says.<\/p>\n \u201cBut we saw India as having all the growth elements that are likely to see multiple years, even decades of growth.<\/p>\n \u201cIn recent years geopolitical issues and China\u2013US tensions have pushed a lot of investors towards India.\u201d<\/p>\n Source: Banyantree, Macrotrends<\/p>\n \u00a0<\/p>\n Riaz says one of the key statistics for investors to examine when investing in a country is GDP per capita, which is a good measure of economic performance and indicator of average living standards and economic well-being.<\/p>\n He says according to historical trends, the US$2,000 GDP per capita level has typically been an inflection point for any economy.<\/p>\n \u201cWhen China started to invite companies to take up the country\u2019s manufacturing capabilities in 2006 that\u2019s when its GDP per capita exceeded the US$2000 mark,\u201d \u00a0Riaz says.<\/p>\n \u201cThat\u2019s when China started having internal consumption growth, middle, rural and obviously upper class growth and broad-based prosperity throughout the economy that led to where it is today.\u201d<\/p>\n Riaz says fast forward to today and India has just hit that US$2000 GDP per capita mark.<\/p>\n \u201cIndia is where China was in 2006,\u201d he says.<\/p>\n Riaz says major global companies like Apple and Google\u2019s parent company Alphabet are starting to invest in India and look for diversification away from China.<\/p>\n He says the policies are focused on internal consumption growth and there\u2019s government stability with Prime Minister Narendra Modi likely to get another term at the upcoming national elections in April.<\/p>\n \u201cYou\u2019ve got a lot of support from external companies looking to invest and set up in India,\u201d Riaz says.<\/p>\n \u00a0<\/p>\n India aims to reach high middle income status by 2047<\/a>, the centenary of Indian independence and is also committed to ensuring that its continued growth path is equipped to deal with climate change challenges and reach net-zero emissions by 2070.<\/p>\n \u201cIf they can fire up the middle class and lower income earners \u2013 so the rural areas \u2013\u00a0 you could see GDP per capita and consumption growth, which will lead to sectors like consumer staples, discretionary expenditure, luxury goods, automobiles and financial services give double digit growth,\u201d Riaz says.<\/p>\n He says there is a push to move away from India\u2019s underground black economy through various measures such as ensuring\u00a0 all classes have greater access to banking services, while also improving housing for lower income earners.<\/p>\n \u201cIt\u2019s probably got a lot to do with the Indian election coming up in April,\u201d he says.<\/p>\n Riaz says there\u2019s been really good growth in middle and high end housing but a real supply slump in low end housing.<\/p>\n \u201cSo with a focus on equality we expect the Indian Government to introduce a lot more housing measures that not only support the top end but also increases supply of quality housing for low income earners,\u201d he says.<\/p>\n \u201cAll these kind of measures will go towards further increasing GDP per capita.\u201d<\/p>\n He says India already has strong economic growth supported by a young population. The Indian economy is forecast to grow ~7.3% in the current financial year after growing 7.2% in FY23,\u00a0 which Riaz says is the best among major economies.<\/p>\n \u201cThe point is despite all this excitement around India there is still a long growth runway ahead,\u201d he says.<\/p>\n \u00a0<\/p>\n Riaz says the risks for investors and what they must be mindful of when investing in India is that fiscal and monetary policy must support equality, with prosperity flowing through the entire population.<\/p>\n \u201cIt cannot be the top 20 to 30% because then you are not going to get that growth everyone is looking for,\u201d he says.<\/p>\n \u201cThat is where the risk is as domestic spending will all come from better higher-quality paying jobs for middle and lower income earners.\u201d<\/p>\n Riaz says ensuring growth flows through the whole population and not just the top end will come down to government policy.<\/p>\n \u201cIf that happens you really are sitting on a really attractive market for the next decade frankly,\u201d he says.<\/p>\n WORTH READING \u2013 \u2018Ahead of the curve in fighting inflation\u2019: Why these experts are betting on emerging markets in 2024<\/strong><\/a><\/p>\n Coming up: Riaz\u2019s top three investment picks for India\u00a0<\/strong><\/p>\n The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.<\/em><\/p>\n <\/span><\/p>\n The post The new Middle Kingdom \u2013 Why Banyantree thinks India is like China in 2006<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"India where China was in 2006<\/h2>\n
Middle income status aim to boost economy<\/h2>\n
Prosperity must flow through whole economy<\/h2>\n