Acquiring Interest in India's Exchanges

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Includes: IFN, IIF
by: Bill Cara

The two India Funds that trade on the NYSE, India Fund, Inc. (NYSE:IFN) and Morgan Stanley India Investment Fund, Inc. (NYSE:IIF) were down -1.7% and -3.1% today. Only 3 of the other 13 stocks I follow were up. As I say, these BRIC markets are the leading indicators of a global equity market decline, so they need to be watched closely.

Interactive charts of 12 key U.S. listed Indian stocks

I think there are legitimate reasons for investing in India for the long-run. In forty years, I suspect the GDP of India will surpass that of Western Europe and the U.K. combined, and of course Japan. I intend to write more about this in 2007.

Deepak N. Lalwani, Director of Astaire & Partners Ltd. (Stockbrokers), London, has sent these reports with compliments:
Download Jan 8 report

Download Dec 29 report with 2007 forecast

Gold Exchange Traded Funds [GETF] will be offered in India this year, which is certain to increase global demand for gold.

The NYSE and two others have acquired a 20% interest in India's largest and most automated stock exchange, The National Stock Exchange. With U.S. listing rules as strict as they are, it could be that the NYSE intends to take orders to India. The Bombay Stock Exchange, the oldest exchange in India and owned by about 800 stockbrokers, is slated to offer 51% control to others in May.

Many Indian companies are listed on both exchanges, which caused me to ask these exchanges why. I didn't receive an answer from either exchange. I will have to learn more, obviously, because India is a rapidly emerging economy that, within two generations, will become a global economic powerhouse.

Whereas the strength of the Chinese economy is manufacturing, in India it is services. In the context of a global economy, as long as there are such divergent wage levels, jobs from North America and Western Europe will continue to be lost, and the highly taxed, so-called "advanced" economies will struggle to carry the burden of social costs and public debt service.

This issue seems to me to be the biggest facing the world today.