Emerging-markets guru Mark Mobius thinks India will do better than the other countries known as "BRICs," Brazil, Russia, and China. Mobius manages $34 billion of emerging-markets assets for Templeton Asset Management. His largest commitments are in Brazil, India, and China.
In comments posted on Templeton's website, Mobius points out, "Most Indian companies have healthy balance sheets and strong cash flows. The Indian stock market was a good performer in 2009 and we expect it to continue to outpace other emerging markets next year."
The view on the ground in India tells me Mobius could be right. The culture here is as entrepreneurial as any on Earth, and much more than most. The country has a history of trading and commerce that goes back thousands of years. It has a tradition of land ownership – with zero debt – that goes back millennia, too. Can you imagine what the last few years would have been like if the United States had a culture based on the notion of owning land with 100% equity?
I realize unleveraged land ownership isn't a magic bullet, but when I asked around about India's banks, the answer was simple: "They're just fine." Of course they're fine. They don't lend money to people to buy land.
There's as much hustle and bustle here as any place in the world. Today, I left Chennai and flew 40 minutes to Coimbatore, then drove two hours over newly paved roads to Erode to visit a pulp and paper plant. The streets of Chennai were mobbed. The streets of Coimbatore – a "small town" of 2 million – were mobbed. The streets of Erode were mobbed. The streets of the gold district were mobbed on Sunday morning when we went there. There ain't no recession here.
The flight to Coimbatore cost $40. The flight back to Chennai cost $70 and featured a full, fresh, hot South Indian meal with soup, a main course, and dessert, which was delicious. Everywhere you go in this country, the service is prompt and friendly, and the airlines we flew today – SpiceJet and Paramount – were no different. The cell phone reception is better than anywhere in the States, and you can make international calls for a few cents a minute (Sprint, on the other hand, wants $2.49 a minute).
Another thing I've noticed here in India... the rules for certain notoriously unprofitable businesses seem to be different. Both the airlines we flew today are profitable. There are six business newspapers in this country. All of them are profitable. Businesses like sugar refining and paper making are generating 25%-30% or higher returns on capital. That tends only to happen in a rapidly growing economy. India's GDP has been growing 7%-9% a year the last four years. I think it can probably do that for several years to come.
Jim Rogers knocks India, saying it's too bureaucratic... But I've asked my hosts how long it would take to set up a vehicle to purchase land for, say, a hotel or apartment development. The answer shocked me: 30 days. So the fact that foreigners can't open an Indian brokerage account doesn't mean they can't put money to work here.
In comments posted on Templeton's website, Mobius points out, "Most Indian companies have healthy balance sheets and strong cash flows. The Indian stock market was a good performer in 2009 and we expect it to continue to outpace other emerging markets next year."
The view on the ground in India tells me Mobius could be right. The culture here is as entrepreneurial as any on Earth, and much more than most. The country has a history of trading and commerce that goes back thousands of years. It has a tradition of land ownership – with zero debt – that goes back millennia, too. Can you imagine what the last few years would have been like if the United States had a culture based on the notion of owning land with 100% equity?
I realize unleveraged land ownership isn't a magic bullet, but when I asked around about India's banks, the answer was simple: "They're just fine." Of course they're fine. They don't lend money to people to buy land.
There's as much hustle and bustle here as any place in the world. Today, I left Chennai and flew 40 minutes to Coimbatore, then drove two hours over newly paved roads to Erode to visit a pulp and paper plant. The streets of Chennai were mobbed. The streets of Coimbatore – a "small town" of 2 million – were mobbed. The streets of Erode were mobbed. The streets of the gold district were mobbed on Sunday morning when we went there. There ain't no recession here.
The flight to Coimbatore cost $40. The flight back to Chennai cost $70 and featured a full, fresh, hot South Indian meal with soup, a main course, and dessert, which was delicious. Everywhere you go in this country, the service is prompt and friendly, and the airlines we flew today – SpiceJet and Paramount – were no different. The cell phone reception is better than anywhere in the States, and you can make international calls for a few cents a minute (Sprint, on the other hand, wants $2.49 a minute).
Another thing I've noticed here in India... the rules for certain notoriously unprofitable businesses seem to be different. Both the airlines we flew today are profitable. There are six business newspapers in this country. All of them are profitable. Businesses like sugar refining and paper making are generating 25%-30% or higher returns on capital. That tends only to happen in a rapidly growing economy. India's GDP has been growing 7%-9% a year the last four years. I think it can probably do that for several years to come.
Jim Rogers knocks India, saying it's too bureaucratic... But I've asked my hosts how long it would take to set up a vehicle to purchase land for, say, a hotel or apartment development. The answer shocked me: 30 days. So the fact that foreigners can't open an Indian brokerage account doesn't mean they can't put money to work here.
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