Tuesday, February 14, 2006

The Top Investment Places to Invest- China and India

A CIA sponsored study predicts that in a couple of decades, India and China will be major players on the geo-political scene. The report cities similarities of these countries development to the rise of Germany in the 19th century and the rise of the US in the 20th century. See full report on CIA site here.

In the World Economic Forum held in Davos, Switzerland, Jan 25-29, 2006, the investing community was all gaga over India as the emerging star. The Indians completely stole the show. See CNN story here.

What's happening? Globalization, with rapid advances in technology and communication (Internet, Cell phones, etc) is narrowing the gap between the developed and developing worlds fast. India and China are big countries, and their growth is torrid but steady (a difficult combination!) and right now in the world, these are the places to invest. India has an edge over China because of its free markets, free press, a vibrant democracy, and experience with capital markets which is comparable to any developed country. The Mumbai Stock Exchange has twice as many companies listed on it than the NYSE.

When investing in stock markets, it is always good to keep the macro picture in your mind. If India can keep growing at +7% per annum for the next few years, the Indian stock market will keep it's bullish trajectory-and REDF and SIFY, being THE players in the Indian Internet Space, will also keep doing well.

The two stocks have had a bit of a sell-off recently, which to me is a buying opportunity. For people waiting on the sidelines to get into REDF and SIFY stocks, with REDF down from $33 to $25, this represents a good entry point.

In the US Markets, GOOG stock seems to be showing signs of weakness, it is considerably down from it's all time high of $470 set a few months ago. It still is a $100 Billion dollar company, and with competitors like YHOO and MSFT moving in strongly in the Search Market Advertising world, Google's margins are likely to erode even further.

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