Weekly international investment round up to 5 May 2009
• The world’s largest democracy goes to the polls
• India’s Sensex stock index surges higher
As millions go to the polls in the world’s largest democracy their main stock index the Bombay Stock Exchange Sensitive Index, or Sensex, breaks through the psychologically important 12,000 barrier, hitting a seven month high.
Just a few months ago the Sensex was languishing around the 9,000 level but with overseas investors now returning to this major emerging economy and pumping in some $1.3 billion last month alone according to the country’s stock market regulator, this fascinating nation is on the rise again.
The scale of India’s current general election is quite staggering. It is estimated that over 800,000 polling stations are needed nationwide for the country’s 714 million eligible voters while the election is being overseen by some four million officials. Such a huge task means voting has to be spread over 5 different days; 16 April, 23 April, 7 May and finally the 13 May. The votes will then be counted on the 16 May.
The United Progressive Alliance (UPA) has been in power for the past five years and is being challenged by a number of opposition parties with economic reforms, improvement to the country’s infrastructure and internal security issues following the November 2008 Mumbai attacks high on the Indian electorate’s agenda.
Investors who have never before considered India may wish to reconsider for not only has the financial crisis reshaped the world, changing demographics are also likely to influence the globe’s future leading economies. In their 2004 study, the Population Reference Bureau (PRB) predicts that the number of people on Earth will reach 9.3 billion by 2050, compared to 6.3 billion today. This will clearly have an impact upon the planet’s resources and contribute to a shift in the global economic powerbase. Surprisingly, their report indicates that in 2050 India will become the most populous nation at around 1.63 billion with China in second place at almost 1.44 billion. The world’s current economic superpower, America, is likely to see an increase in their population from their current 300 million to approximately 420 million over the same time period.
India is currently the world’s second most populous nation with around 1.08 billion people of which just under half are under the age of 25. In the vast middle class of 250 million people English is widely spoken and within 30 years the Indian economy is tipped to be larger than that of Western Europe!
In fact, global equity research group, Elliot Wave International, who specialize in the analysis of stock market movements believes that the recent surge in the Indian market could be the beginning of a ‘bull run’ cycle which could last many years. In fact, they estimate that within the next 15 years the Sensex index will break through the 100,000 barrier representing growth of over 8 times its present level.
The Sensex reached an all-time high of 21,206.77 points on 10 January 2008 before spiraling downwards to a low of 7,697.39 points on 27 October.
As demonstrated by their millions of poor and illiterate who willingly climb mountains and swim rivers to vote, this nation has an incredible future.