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XMFSinchiruna (27.88)

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November 23, 2009 – Comments (12)

You have a real opportunity here, Fools.

There are several giant variables for U.S. investors that cast a pall of gray over even the best-intentioned assumptions in the brick and mortar of our investment theses. China is the most obvious variable, where debate rages between those utterly convinced (as I am ) by the nation's ability to sustain breakneckd growth in the face of global headwinds, while others rightly point to China's red-hot housing market and lending blitz as potential spoilers to the party of our assumptions. I have found myself wishing several times over the past couple of years that I could just pick up and travel to China to view for myself the conditions on the ground there. For the most part, the reporting from China by financial and investment-related entities has been deplorably insufficient.

Grey spot #2 is also BRIC #2: India. India is a massive variable in the decoupling formula that I laid out for you a few weks ago. I have been reporting the anticipated surge in Indian coal demand for the past two years, and those long-term expectations have not been derailed by the tsunami that slamed into the global economy last year. India's central bank is making the right moves, as we well know. The Tata group is not exactly exactly sitting around waiting for, well, anything. Tata Motors, Tata Steel, and pretty much everything Tata has been back on the move.

I have suggested throughout this crisis that all eyes must be on China, but in truth part of one eye may well belong on fellow Pan-Asian decoupler India. Understanding India is as important to understanding the future of the decoupling phenomenon as understanding China has been to predicting decoupling's resurgence.

I don't know about you Fools, but I was very thankful to have access to first-hand reporting from China by the Motley Fool Global Gains team last summer, and their on-the-ground confirmation of trends I was sensing underfoot removed considerable uncertainty from my assumptions about China's resurgence. Just in time to confirm whether this Pan-Asian decoupling phenomenon has the legs that I think it has, the Global Gains guys are going to india. But here's the kicker ... you Fools have an opportunity to shape their research focus by posting your questions about India and what kinds of information you are interested in.

I have just entered my e-mail address here, so I'm all set to receive their updates as they travel around the country. This will be a lot of fun, and I hope you'll take part. For starters, toss your e-mail address onto their list so you can receive the travel updates too. Then, return here to post your own individual research questions ... which Tim and the guys will review before they leave and select some of our questions to guide their collective inquiries. I think this is exciting ... it's like having our own research team to send out and find answers to our questions from halfway around the world.

 

Now that you see the opportunity we have here, let me get the ball rolling by posting my own research questions. Please carry on my momentum and post questions of your own. If you have capital allocated globally in any serious way, chances are there is something you are interested in knowing about the Indian economy or investment opportunities there.

 

TMFSinchiruna's research questions:

1. Public attitides toward gold: We all know India has led the world in retail demand for gold jewellery for eons, but how are those attitudes being shaped by the abrupt rise in gold prices, and where does that trend intersect with the cultural significance of gold adornment both as stores of family wealth and as icons of status. To the extend that the rural poor may be priced out of an ability to procure gold, are there other metals that may fill the void? In China, I know that silver will gain prominance as a replacement for gold once gold is priced beyond the means of the masses, but what traditional role does silver have both within the Indian investment world and within the broader cultural complex.

2. The industrial scene: I can tell more about a country's growth prospects from a snapshot of industrial activity than I can from 1,000 pages of data-crunching economic analysis. What is the pulse of industrial activity? Are the steel mills hiring? Are manufacturers of products intended for sale to domestic markets expanding, stagnant, or contracting? 

3. India's thermal coal imports are expected to triple over the coming years to more than 100 million tons. The significance of this forecast upon the outlook for global coal producers is great enough that any confirmation or update on the state of that coal demand would be greatly appreciated by this and many other long-term coal investors.

4. Mumbai experienced such a massive growth spurt prior to the crisis, I wonder whether the city finds many newer developments are empty or whether the city's economy has kept apace. Everywhere I look here in the U.S., I find housing developments or condominium complexes built in the latter stages of the boom stand as ghostly reminders of the excess that prevailed. Does Mumbai exhibit any such ghost town equivalents?

5. The Service Economy: Given the enormous rise of customer-service related outsourcing from companies in the U.S. and elsewhere over recent decades, has that sector felt a major impact from the global downturn as yet, and could you characterize the nation's degree of reliance upon that segment of the economy?

 

To the Global Gains team, thank you very much in advance for considering my questions and those of my fellow Fools posting their own questions below. I look forward to receiving your e-mail updates during your trip, and to perusing your full research reports in the Global Gains newsletter.

For Fools without a Global Gains subscription, may I gently suggest that this could be a fruitful time to consider a 30-day trial? At the very least, though, get involved with their trip by signing up to receive their e-mails, and decide for yourself whether you value the research they provide. I, for one, am thankful for it!

Okay, Fools, don't be shy ... let's see your questions about India in the comments below!

Fool on!

 

 

12 Comments – Post Your Own

#1) On November 23, 2009 at 8:22 AM, dudemonkey (40.40) wrote:

I was a subscriber to TMF Global Gains.  Great newsletter.  I found one of my stock ideas in there and will eventually resubscribe to get their impressions of other countries.

That being said, you bring up an interesting question about who will drive global growth.  I don't know the answer, but I have my suspicions.  One thing I DO know, however, is that whomever's economy surges ahead is going to need natural resources galore ... iron, steel, fresh water, food.  And that's why my strategy involves heavily researching and investing in Brazil.  Like you said, you can learn a lot just by hanging out, looking around, and talking to people who live there.

My favorite part of investing in Brazil is take a "research trip" there like I did last week.  It was a lot of hanging out on the beach all day and then going to brazilian-style barbeques, the kind that last all weekend.  I learned a lot by looking around and talking to some of the locals.

I realize I might lose out on a few, maybe many, basis points of compounding by not investing directly into India or China, but I'd rather learn a lot about Brazil and place my bets there (and here in the US) on well-researched and selected companies.  I'm not really interested in India and I'm not really convinced that all of the information (especially financial) coming out of China is accurate and trustworthy.

As always, a great, insightful post.  Thanks!

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#2) On November 23, 2009 at 9:06 AM, catoismymotor (37.10) wrote:

Satyam and Tata are the only companies I can think of that are routinely brought to my attendtion from India. I have read in the past about the odd bank that is positioned to rake in money from lending but that is it. I would like to learn more about the offerings of India. Shortly I will add my name to the mailing list.

Like dudemonkey I am most excited about Brazil. Until this time last month I was heavily invested in China. I have sold 80% of those stocks and still have a chunk of the cash set aside for a market drop or a different kind of compelling opportunity. India might have one or two for me. But Brazil has five right now that really have my attention.

This is a great time to be an investor!

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#3) On November 23, 2009 at 9:17 AM, JibJabs (93.97) wrote:

"I have found myself wishing several times over the past couple of years that I could just pick up and travel to China to view for myself the conditions on the ground there."

I live and work in China- if you have specific questions, I may be able to help you out with some. Please understand that there are certain topics that I shouldn't discuss but I'll do what I can. 

I will go to bed soon but I'll be back in front of a computer around 6 am tomorrow, your time (planned power outage and work). 

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#4) On November 23, 2009 at 9:52 AM, dudemonkey (40.40) wrote:

Please understand that there are certain topics that I shouldn't discuss but I'll do what I can.

This, right here, is the main reason I don't own any Chinese stocks.  How can you trust the reliability of any information that comes out of that country when people openly say that they can't tell you the whole picture?  I thought I remembered the Global Gains guys mentioning that the businesses they visited kept several sets of books and no one, not even them, was sure which was the "true" set of numbers.

I'm more in favor of Sinchi's strategy of trying to figure out what these blossoming economies are going to need, figure out who will sell it to them, and buy those companies.  Although even that requires a lot more speculation than I'm comfortable with.

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#5) On November 23, 2009 at 10:01 AM, JibJabs (93.97) wrote:

Agreed. Very few people can tell you the whole picture and if they could, they wouldn't. I will say this- I came to China with the idea of eventually investing in it (as well as learning Chinese, which I am doing but it is very difficult)- and I will not be investing in China. I do believe in its massive growth potential but I've seen enough to be nervous about investing here.

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#6) On November 23, 2009 at 10:23 AM, devilzadvocate (64.41) wrote:

Am visiting India right now.. and there are quite a few good companies one can invest in. Indian Real Estate (in cities like Delhi, Bombay) is another way to invest in India.

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#7) On November 23, 2009 at 12:12 PM, UltraContrarian (31.22) wrote:

I like India's story, but there are so few companies trading in the US - and they're not that cheap right now.  Until it gets cheaper I will stick with China, Brazil, Australia, etc.

By the way could you add State Bank of India SBKFF.PK to CAPS and the India tag?  I'm sure there are other PKs to add as well in preparation for the trip.

Sorry if this is a double post, CAPS is being squirrelly.

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#8) On November 23, 2009 at 12:35 PM, Counterparty (< 20) wrote:

It's very difficult to really invest in India as a private investor. I thought about investing in the few ADR's available, but in the end I went for IFN after I read an article about the management team and investment strategie and exposure. Until now I haven't found anything better for India exposure.

It's been performing very nicely along with CHN for China exposure, but the real surprise has been the iShares Eastern Europe and iShares Peru. They have been outperforming big time, especially the Peru fund, but sometimes it's more about timing then anything else. The Peru fund is very much commodity oriented and the dollar situation makes commodities plays very attractive for overal return and also as a hedge.

 

 

 

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#9) On November 23, 2009 at 4:27 PM, ChrisGraley (30.06) wrote:

Put the TMF staff to work!

Chris come rake my leaves and wash my car! ;)

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#10) On November 23, 2009 at 4:39 PM, silverminer (31.28) wrote:

ChrisGraley

Only if you'll pay me in silver. ;P

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#11) On November 23, 2009 at 7:58 PM, UltraContrarian (31.22) wrote:

Also could you also add Reliance Infrastructure (RELFF.PK) and Hindalco (HNDNF.PK) to CAPS and the India tag?

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#12) On November 25, 2009 at 2:41 AM, SnapDave (50.92) wrote:

I'd be interested to know what, if anything, India is doing in the way of improving its abysmal infrastructure.  

According to the update, GG members will automatically get India e-mails. 

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