India better long-term than China
China is often seen by the investment community as the emerging market offering the most opportunities in the future, but a senior executive of a leading fund manager believes India presents a better long-term bet.
Speaking at the Financial Services Partners prestige partner conference, Fidelity national account manager Tom Keenan said: “Over the last four years India has been averaging an economic growth rate of between 6 and 8 per cent per annum. Not quite as high as China but still stunning rates of economic growth.”
Coupled with this comparable rate of growth, Keenan believes certain characteristics India has gives it a more compelling investment story than China.
One of these characteristics is the country’s political structure.
“India is the world’s largest democracy. Unlike China it holds regular and largely free elections. They are a by product of the English Westminster system after being a colony of England, so they have a clear separation of powers between the state and the courts,” Keenan said.
“Long-term these things make it an attractive investment proposition because compared to other developing economies, they have the framework in place that you only see in large Western developed economies,” he said.
According to Keenan, the level of education among India’s workforce is another factor it has over other emerging markets.
“India has a very educated population which is culturally aligned to the west by virtue of the fact that the educated class in India speak English and they are able to deliver a far more sophisticated export than the Chinese are,” he said.
Keenan feels India’s already established sophisticated stock market is another area that gives it the edge over China.
“They’ve had online trading since 1994. They’ve been trading options and futures since 1991. There are a large number of companies that are dual listed on the Indian stock market and the US and European stock markets, and its corporate governance is rated third in Asia only behind Singapore and Hong Kong,” he said.
“So you don’t have those corporate governance issues that you have in China and some of the smaller Asian economies, but it can be a very volatile place to invest,” Keenan added.
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