Sunday, May 4, 2008

INDIA's 3 D's + AG Economy

According to a TheStreet.com interview with Pratik Sharma, managing partner of India's Atyant Capital hedge fund, INDIA is a attractive place to invest in because of the Three D's:

1.) Demographics

2.) Domestic Demand

3.) Depth of Markets

*Demographics --> About HALF of India's population is under the age of 25 (including 32% of the population being under the age of 14)...a potentially huge opportunity because the avg Indian consumer, median age being 25 years old, hasn't yet:
1.) reached his 'prime' spending/consuming years and
2.) has several years of consumption remaining in their future...according to the CIA World Factbook, the avg Indian life expectancy is 70 years old

*Domestic --> Only 13% of India's GDP is made up of exports...thus India should be relatively insulated from global economic shocks

*Depth --> The Indian markets offer over 7,000 listed securities...just like the U.S., all of these companies are required to report earnings on both a quarterly and annual basis

http://www.thestreet.com/rms/s/the-two-must-watch-sectors/video/strategysession/10414999.html#1519670996

---------------------------------------------------------------------
Unrelated, some random India Labor Force + AG sector facts:

*India's literacy rate is only 61%...73% for males and just 48% for females...India owns the highest illiteracy rate of all the B.R.I.C. countries (for some perspective, some other notable literacy rates: World average is 82%...99% for the U.S., 91% for China, 89% for Brazil, 99% for Canada, 99% Germany, 77% Iran, 99% Japan, 91% for Mexico, 50% for Pakistan, 99% for Russia, 79% for Saudi Arabia)

*27% of India's population lives below the poverty line (for some perspective, some other notable countries with % of populations below poverty: Brazil 31%, Canada 11%, China 8%, Germany 11%, Iran 18%, Mexico 14%, Pakistan 24%, Russia 16%, UK 14% and the US with 12%)

*India has the world's 2nd largest LABOR FORCE - 516.3 million people (second only to China's 803 million)

*60% of whom is employed by the Agriculture sector (major crops include rice, wheat, oilseed cotton, tea, jute, sugarcane and potatoes)...28% by Services (retail, banking, another example would be IT outsourcing companies like Infosys Technologies - INFY)...12% by industry (autos, cement, chemicals, consumer electronics, food processing, machinery, mining, petroleum, pharmaceuticals, steel, textiles, etc.)

*The AG sector accounts for 28% of the country's GDP...services makes up 54% of India's GDP (thank you robust DOMESTIC DEMAND)...industrial makes up 18%

India's AG sector:
*accounts for 8.5% of India's exports
*about 43% of India's geographical area is used for agricultural activity
*India is the WORLD's LARGEST PRODUCER of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper
*India is the WORLD's 2nd Largest Producer of wheat, rice, sugar...it is the world's 3rd largest producer of tobacco

Data Courtesy: TheStreet.com + The CIA World Factbook.