A full one-quarter of India’s population (300 million/1.2 billion) comprise a bustling middle class. China may have half as many viable consumers (140 million/1.4 billion people).
Wage and income growth favor more spending by India’s middle class as well. Most business profits in China go to Chinese state-run enterprises, leaving less money for consumption-minded citizens; in contrast, profits from all sizes of Indian businesses go into the pockets of, well, Indians. And that means that Indians may be able to shop.
Granted, some of the shopping may be on the lower end of the revenue scale. Tata Motors (TTM) sells the world’s least expensive car and Bharti Telecom offers the world’s least expensive calling plans. Nevertheless, these companies have been hugely successful at enticing lower income consumers.
Overall economic well-being has not passed by this populous country either. Manufacturing activity has been robust, growing for 10 consecutive months. And Reuters has reported that India is on target for 8% growth in the fiscal year 2011.
It is true that I have consistently expressed my bias that China is (and will be) ”Best of the BRIC.” That said, for those who see domestic consumption driving investment returns, you may wish to focus on a powerful shopping base of the future.
There are 3, popular India funds that trade on the exchanges: PowerShares India (PIN), WisdomTree India Earnings (EPI) and The India Fund (IFN).
Disclosure Statement: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.
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