India ETFs: ‘India is the economy to watch in 2012’

Jan 3rd, 2012 | By | Category: Equities

When it comes to emerging markets, China invariably seems to be the focus of attention, but the country to watch in 2012 is India, according to Edward Bland, Head of Investment Research at Duncan Lawrie Private Bank.

India ETFs: India is the economy to watch in 2012

India ETFs: India is the economy to watch in 2012, says Duncan Lawrie's Edward Bland.

“We are keen on emerging markets, especially India, because they offer the best prospects for the long-term equity investor,” says Bland. “The effect on India from the continuing crisis in the eurozone is likely to be less pronounced than on other Asian economies, including China, as the Indian economy is less dependent on exports than its neighbours. Currently I see India as a contrarian buying opportunity for investors”.

Despite the economic malaise in Europe and the slowdown in the US, Bland expects economic growth in India to be around 7.5 per cent in 2012 and 8.1 per cent in 2013. That compares to 10 per cent growth in 2010.  Even if these projected numbers are revised downwards, they comfortably outstrip the growth expected in the developed world.

Bland says India is building much needed infrastructure and investing heavily in capital projects.  Critically and looking longer-term, India’s greatest potential comes in the form of demographics, and a burgeoning young workforce. India currently has a population of 1.12 billion, but by 2025 the country is expected to have more people than China.

Bland says that another key economic development is the introduction of a unique ID card system, which will allocate welfare payments efficiently, as well as being a means of paying workers. The entire Indian population may eventually be required to open a bank account, potentially unlocking a swathe of consumers with access to credit.

Bland says investors should look beyond the fact that the Indian Sensex index fell almost 25 per cent last year in local terms, making it one of the poorest performers amongst emerging markets, as fears over the sustainability of global economic growth combined with more specific concerns over the Indian economy triggered a capital flight homewards from foreign investors. Added to which, since October 2011, the Rupee has weakened significantly against the US Dollar.  As a consequence India hasn’t benefitted from the knock on impact of the moderation in oil prices.

In the long term Bland believes that India and other emerging markets will deliver the best returns for investors. “The truth is that in the West, growth is not going to match what we have seen in recent decades. At Duncan Lawrie, we have a significant commitment to emerging markets, and believe that India will be at the forefront of their superior performance.”

For investors looking to gain exposure to Indian equities, there is a growing list of ETFs & ETNs to choose from, tracking a range of different India equity indices.

The S&P CNX Nifty Index offers exposure to 50 of the largest and most liquid Indian securities listed on the National Stock Exchange of India

iShares S&P CNX Nifty India ETF

DB X-tracker S&P CNX Nifty India ETF

The MSCI India Index is intended to reflect the performance of the Indian equity market by targeting all companies with a market capitalisation broadly within the top 85% of the Indian investable equity universe

Source MSCI India ETF

Credit Suisse MSCI India ETF

DB X-tracker MSCI India ETF

Amundi MSCI India ETF

The Dow Jones India 15 Index represents 15 of the largest and most liquid stocks traded on the Bombay and National stock exchanges of India.

EasyETF DJ India 15 ETF

The following are all US-listed exchange-traded products:

Barclays iPath MSCI India Index ETN 

Van Eck India Small-Cap Index ETF

EGShares India Consumer ETF

EGShares India Infrastructure ETF

Direxion Daily India Bull 3x Shares ETF

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