RV Blog The Game of Investing, Vol. 38

The Game of Investing, Vol. 38

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This Week…

We’re looking at a misunderstood and potentially lucrative emerging investment opportunity: India.

India’s economic, political, and social reforms have been ongoing for decades, simultaneously enticing and befuddling investors along the way. 

Angus Shillington, deputy portfolio manager of emerging markets equity at VanEck, joined Maggie Lake in this conversation (paywalled) to explain India’s unique subtleties, how the investment landscape has evolved of late, and why this opportunity aligns perfectly with the technological revolution.

In this issue, we’ll cover 2 things:

  • The evolving investment landscape in India.
  • How this emerging market opportunity could go Exponential.

Let’s get into it.

Welcome to the Game

Welcome to The Game of Investing, a bi-weekly newsletter bringing you “aha” moments and actionable lessons from Real Vision experts. No matter your level of expertise, markets are tough — which is why we all have to put in the work. Ultimately, the game of investing is a competition with yourself. Our mission is to help you navigate the path to success. Prepare to level up.

LEVEL 1  — Understanding the Past and Present

For years, China has been a magnet for foreign investment seeking upside opportunities in the evolving Asian markets. Recently though, more investors are flocking to India.

In a recent episode of Macro Mondays (free), Andreas Steno Larsen examined the correlation — which he likened to a see-saw — between Chinese and Asian markets.

  • “We’re starting to see inventors leave China again — and that results in more buyers entering Indian equities,” says Andreas.
  • “It’s simple math. India is the other big, emerging player in the region… You cannot be positive on both.”

So why exactly are more investors warming up to India?

Since the 1980s, India has worked to reform economically, politically, and socially. Angus believes those incremental steps are now bearing fruit and that India has positioned itself to be a leader in commerce and technology just as we enter the age of total digitization.

But this thesis isn’t exactly new… Over the last few decades, there’s been no shortage of hollow promises of an Indian consumer juggernaut dangled in front of investors.

  • Angus says this dynamic has led to lingering skepticism from both foreign and domestic investors in India.

There has been a significant shift in the Indian business environment, according to Angus.

  • “Business owners used to rely on corruption and political favoritism for success,” he says.
  • “There’s much more transparency and competition in India today — and that allows new businesses to leverage innovations like digitization.”

Shillington believes that the companies that can survive the tech revolution will be positioned to capitalize on a transformative era of growth.

Plus, Angus believes that the increasing trend of college-educated Indians staying home to work will add fuel to the fire.

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LEVEL 2 — The Future: “Gradually, Then Suddenly”  

According to Angus, India’s implementation of Aadhaar, a unique digital ID system, is pulling the bulk of its 1.4 billion people into the formal economy.

  • This program assigns a 12-digit biometric identifier to every individual, enabling various services and transactions.

What was previously a fragmented, bureaucratic nation has been overhauled into a nation where most citizens, regardless of economic status, have access to credit — and GDP is ballooning as a result.

  • Entrepreneurship is on the rise, as is overall disposable income and average consumption.
  • India’s expanding digital infrastructure is also resulting in improved logistics and distribution capabilities, opening new opportunities to growing businesses.

This is welcome news for potential investors, but Angus warns against broad exposure to India in something like an ETF.

“Moving forward, the risk isn’t in the forecasts, it’s in the investment execution,” he says. “Many businesses won’t survive the digital transformation, so investors need to identify the specific companies that can scale in a way that has never been possible before.”

Much like Raoul Pal’s Everything Code thesis, this opportunity comes down to finding the right way to express a long-term view on the Exponential Age. You can learn more about how Raoul and his team are targeting Exponential Age opportunities right here.

An Important Update. 

Whether you’re new to the Game of Investing or have been reading since Vol. 1, thanks so much for joining us along the way. The Game of Investing is going on hiatus — but we’ll be back in your inbox soon with a slightly new format. 

Until then,

Real Vision.

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