The Incredible Future of India

Published on
March 12th, 2018
Topic
Emerging markets, Fiscal Policy, Macro
Duration
33 minutes
Asset class
Equities

The Incredible Future of India

The Big Story ·
Featuring Raoul Pal, Rahul Khanna, Dilip Cherian, Deepak Bagla, Harsh Gupta

Published on: March 12th, 2018 • Duration: 33 minutes • Asset Class: Equities • Topic: Emerging markets, Fiscal Policy, Macro

In this first part of a two-part series on India, Raoul Pal examines whether India has the potential to become the best macro investment of the next 20 years. The country has a young and dynamic population, and a government that wants to tap into this demographic dividend with an ambitious plan to grow its physical infrastructure and its digital footprint. Raoul takes a grand tour of the big themes that could drive the Indian economy powerfully forward.

Comments

  • fT
    forecast T.
    26 July 2018 @ 16:23
    SEC MADE IT SO EVENTUALLY WE CAN BUY DIRECT NOT OTC! interglobeAviationLtd and = BSE: INDIGO SpiceJetLtd = SJET:IN BSEasOTC = https://www.thehindu.com/business/bse-is-first-indian-exchange-to-get-us-sec-recognition/article23906186.ece
  • dj
    daniel j.
    18 March 2018 @ 06:39
    This opportunity will be significantly reduced when Trump implempts a mirrior tarrif.
  • GA
    Gustavo A.
    17 March 2018 @ 10:31
    Nobel-winner Paul Krugman warns India story could end with mass unemploymenthttps://economictimes.indiatimes.com/news/economy/indicators/nobel-winner-paul-krugman-warns-india-story-could-end-with-mass-unemployment/articleshow/63344124.cms
  • PB
    Pieter B.
    15 March 2018 @ 17:10
    ( some context: I only spent 3 months on the ground in India yet have visited 100 countries in total.)
  • PB
    Pieter B.
    15 March 2018 @ 17:06
    Thanks a lot for the fantastic video Raoul! I also love India and its people yet would not invest there due to risk of automation (see Johns post), African levels of corruption & terrifying pollution.
  • JM
    James M.
    15 March 2018 @ 14:31
    In memory of the great Stephen Hawking who spent the last 10 years of his life try to convince the moronic self absorbed consumer societies of the West personified in the USA that the biosphere can not support the continued mindless consumption that has taken place over the last 70 years since the second world war without the total collapse of the human race and every other species dependent on it. Maybe the people in this piece could take a moment from their salvation of more mindless consumerism justified by continual growth to support not sustainable economies on a finite planet. It would be one thing if India/China where pursuing a truly radical approach and economies based on resource and waste ideology. Of course the criminal corporate parasitic entities will not allow such an approach and should Modi or any other leader seek that pursuit he will find immense pressure from the dominate Empire in place today via economic and if need be military intervention in the usual guise of fighting terrorism or supporting democracy bullshit. Coca Cola, Nestle, Bechtel etc have already secured or stolen would be a better description India's fresh water supplies as they have done in South America and other parts of the world. JPM, Goldman, Citi, HSBC etc will be salivating as the people in the video of the riches that can be stolen from a nation as vast and as rich as India and I don't see Modi stopping them if he even has the desire to do so which I doubt or he wouldn't be in power. So if we seek three or four more USAs and the taking on of debt to buy shit, you dont need and cant afford then we should all be really excited about the proposition of 2.4+ billion people in China and India living like the average moronic American. Who needs fresh water, air, and edible food when you got a ten bagger on the derivatized Indian ETF? RIP Stephen Hawking.
    • pd
      patrick d.
      17 March 2018 @ 22:22
      Right on...
    • SS
      Sam S.
      29 March 2018 @ 22:07
      Two biggest challenges in India: a) endemic and well-entrenched corruption that is prevalent in the entire spectrum of society b) extremely poor state of education (in the major part of interior India, which covers about 80% of its population)
  • GM
    Gregor M. | Contributor
    14 March 2018 @ 23:25
    I take an energy framework view, of what's unfolding in India. I've been watching the country closely for years, especially since Modi won the election in 2014. While it's true that the long term prospect for unskilled labor is poor (this has been true globally for some time, and may be even more true in the years ahead due to automation), my preferred lens for India is its latent demand. Simply put, Modi and Goyal (the energy minister) 1. have been serious about electrification and 2. have been laudibly attacking that issue for several years now. So for many of the justifiable concerns one may have about India's population and its skill levels, it's also the case that there is gargantuan latent demand that will come on line as India electrifies. One example: other commenters here note that India's unskilled labor force is a weakness. Fair enough. But just one year ago, India used that surplus of labor to erect a 650 MW solar plant in world beating time of about 9 months. I will worry about India's growth prospect *after* it marshals hundreds of thousands of workers to erect new energy and transport infrastructure, and economy benefits for a while from those additions.
  • GA
    Gustavo A.
    14 March 2018 @ 12:01
    Are we ignoring environmental impact on future growth. After traveling through India, one can already see the poor quality of air and water in major cities.
  • JH
    John H.
    13 March 2018 @ 20:18
    I love India and its people. I have some long-term India exposure. But very modest relative to the opportunity as presented here. Why? Automation. India's biggest problem is that automation can turn "demographic dividend" to "demographic time bomb." That is not dealt with here and yet it's the Achilles Heel of the whole thesis. Look at what companies like Shima Seiki Manufacturing Ltd (6222 JP) are doing and be very afraid of what masses of unemployed youths are going to do in ten-to-twenty years. I don't know the future, but this is a scenario that no one properly talks about in a bull market.
    • JW
      Joel W.
      13 March 2018 @ 21:07
      Thanks for the comment John. I was thinking the very same.
  • Jc
    Justin c.
    13 March 2018 @ 12:30
    Great piece as usual. I would love to see some information presented on fundamental factors that investors should watch for. Sure the long-term story is great, but i don't normally ride 60-80% corrections. I can trade price on technicals as one option. Fundamentally it is more of a challenge to grab the key indicators. For instance the 2s10s has inverted a couple times during this bull market. The composite PMI just went from 53 to 49.7. But you have M1 YoY exploding higher. What matters? foreign capital flows? And if someone thinks the S&P is rich, well it only trades 0.6 S.D. above 20-yr average. India is almost 1 S.D. above its 20-yr average. It sure looks like there is some unwind coming after their business cycle ends. That is when i would want to load the boat. Having some picture on this would be very beneficial in my opinion.
  • TL
    Tom L.
    13 March 2018 @ 12:29
    Transcript please
  • BF
    Bret F.
    13 March 2018 @ 10:18
    Could Small Caps be a nice investment... SCIF is a etf
  • B
    Bob .
    13 March 2018 @ 06:47
    Excellent job and I appreciate the opportunities that you highlight for us. Thanks, I am looking forward to Part II.
  • MC
    Matthew C.
    13 March 2018 @ 04:40
    Is China the right template for India? China capitalized on a low cost labour arbitrage and a global outsourcing theme that is now largely over. Is huge population growth really an edge in the future?
  • RR
    Raj R.
    13 March 2018 @ 02:34
    Diversify the reliance on call center and IT jobs. My family members who dont work in IT, have no good paying jobs. India has structural problems and the foundation is not strong for a bullish future
  • RR
    Raj R.
    13 March 2018 @ 02:32
    India is mostly dependent on the west for jobs. It is really hard to be very optimistic if we believe the global situation will be worsening. I dont see any domestic initiatives to diversify the relia
  • VS
    Vaibhav S.
    13 March 2018 @ 02:12
    Ruchir Sharma famously noted that India disappoints the optimists and the pessimists alike. The guys from "Invest India" are effectively a PR team created to sell the story. I do think that buying the dips for names focused on middle class consumption will be an attractive yet simply strategy for the next decade or two. That said, most global investors I know don't have the stomach to take the volatility in stock prices and currency when things get rough.
  • CT
    Christopher T.
    13 March 2018 @ 01:30
    nice jacket/scarf
  • PD
    Peter D.
    13 March 2018 @ 01:07
    Great piece Raoul. I admire the bullishness. However I'd be interested in hearing how those arguments stand up to a contra opinion. I am thinking about Jyant Bhandari, who runs the Capitalism and Morality conference. Jyant has travelled extensively in India and is highly pessimistic. I think a debate between Jyant, who is a regular on the conference circuit, and one of those India bulls might provide a useful picture. In fact, RV has a priceless asset, in the fact that you are open to a lot of the bears, who are banned from mainstream media. I'd be really interested to see how guys like Harry Dent, Peter Schiff, Mark Faber, John Williams et al, and even James Grant, would fare in debates against some of the professional bulls on a variety of subjects. My suspicion? No professional bull would step in the ring with any of those guys. That alone should tell us all something.
  • FC
    Fractal C.
    13 March 2018 @ 00:13
    No Rakesh Jhunjhunwala?
  • RS
    Ryan S.
    12 March 2018 @ 18:53
    Really interesting
  • HA
    Hammad A.
    12 March 2018 @ 18:32
    There are lots of ‘ifs’ and ‘buts’ in this story and most of the interviewees are marketing the story with extra doses of optimism. Does not look like a compelling investment idea, at least at this stage.
  • MH
    Martin H.
    12 March 2018 @ 18:18
    This was disappointing to me. Lots of focus on demographics, infrastructure and all the positive things the government is doing. Very little about local entrepreneurs, comparative advantages and future exports. They are massively dependent on foreign energy, any progress here? Are they privatising and loosening up the red tape and bureaucracy? I know very little about India, but nothing in part 1 gave me a reason to invest in a arguably overvalued country.
  • RD
    Ron D.
    12 March 2018 @ 18:00
    I like that you start focusing on this story, but this is still entry level stuff - and you sort of did that last year already. Beyond these two slightly deeper videos, I think you need to start diving deeper into specific sectors, currency and bond implications by individual experts in India. You have made a convincing case that India is the next China story, now there needs to be more information on how to actually play it.
  • TD
    Tom D.
    12 March 2018 @ 17:55
    On all your videos, not just this one, please try to leave the charts and written words longer on the screen (or add a pause feature) in order to allow viewers more time to study the information. Thanks...India was a great video.
  • CD
    Chris D.
    12 March 2018 @ 13:55
    India is undeniably a very interesting investment case. But another way to play the "Indian consumer" is through - you guessed it - gold. If the story here unfolds as planned, there will be a tremendous bid on the gold market as well from 2020-2040, just when "peak gold supply" is achieved...
    • LK
      Lyle K.
      12 March 2018 @ 15:41
      I also think India's Rupee is going to keep rising as investment booms usually strengthen the countries currency.
    • EL
      Eugene L.
      12 March 2018 @ 16:40
      Interesting! I actually saw a piece that showed that the Indian super wealthy buy much less gold in comparison to the global wealthy.
  • TJ
    Terry J.
    12 March 2018 @ 13:05
    I have been eagerly awaiting an update on India and suffice to say I am not disappointed. I can't wait for part two. As always, when it comes to the most important investment stories, RVTV can be relied on to provide the very best analysis!

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