Indian investments may not be the same for awhile…
I am sending this note because our study of multi currency portfolios have shown that after global investment markets tank as they have the last two months, emerging equity markets have been the first and strongest in recovery.
This may not be the case now for several fundamental reasons.
For the past three years, Indian and Chinese investments have been big winners. They have been the back bone of performance in the Emerging Multi Currency Portfolio we created and track with Jyske Bank.
That Emerging Market Portfolio has performed astoundingly well, up 114% in 2006. Up 122% in 2007.
Of course that portfolio has been slaughtered in 2008. In our last update from November 2007 to January 21, 2008 the Emerging Market Portfolio was down 36.78%.
Surprisingly this was the second best performer of all six portfolios.
|Portfolios 2008||Nov 16||Dec 14||Jan 13||Jan 21 2008|
|Emerging Market||-13.33%||– 9.80%||– 8.72%||-36.78%|
|$ Short Non||– 5.26%||– 9.08%||– 7.39%||-15.42%|
|Blue Chip||– 2.78%||– 5.14%||– 3.41%||-37.68%|
Only the non leveraged portfolio did better and it is interesting to note that the emerging market portfolio performed better than the blue chip portfolio.
This would seem to favor emerging markets.
Yet while all the other investments in that portfolio crashed, the Jyske Invest Indian Equity Fund did reasonably well and actually rose from $420 a share to $450.
Jyske Invest explains this phenomenon in its current review of India ’s prospects when it said:
“Strong growth and ample cash will probably keep up interest in Indian equities. Uncertainty about global growth may increase interest in Indian
equities, which are not very dependent on global growth.”
In other words Indian equities are attractive right now because India is not so involved in exporting to the rest of the world. This may be good short term…but this is a problem in the bigger view which is one reason we should exercise caution now.
Here is India ’s crunch.
India has leapfrogged past the 20th Century, cheap labor intensive export phase used in most Asian countries. India jumped directly into 21st Century high tech, global services.
You can read more about this and other reasons why India could see slower growth now, in our multi currency course. Details are at www.garyascott.com/catalog/bldh
If you are already a multi currency subscriber, the entire report on India has been sent to you.
We live in a universe that seems to be composed of interactions of frequency. The fractal nature of this interaction can be summed up by saying “as above so below” and this means that all events, cosmic, political, biological and certainly economical are subject to extremes as the pendulum swings.
Therefore the recent seven year swing that has favored emerging markets may now be near or past the end of its current arc.
Or maybe not.
No one can come to a certain conclusion.
What we can say is that many conditions that have favored emerging markets are now less favorable. The big winners of this decade so far, India and China , should be more carefully watched.
Join Merri and me this winter or spring at one of our tours and courses are below: Here we are with our last group at La Mirage Garden Spa.
Enjoy the renovations in our colonial hotel El Meson de las Flores .
See the view form this house for sale…unless its gone by the time you arrive.
Another view from the house.
Sleep in a sea breeze at Palmazul where we will stay during the coastal tour.
With views like this.
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Here are a group of previous delegates boating to a shamanic ceremony on Lake Cuicocha