Indian market beats Chinese in diversity

 Here is a very good comparison between Indian and Chinese Markets :-

India has the potential to be the next great bull market of the 21st century – an opportunity of being a better investment than even China!

Like China, India was stuck with a failed economic system for over 50 years. It was a bureaucratic, socialistic state that led to weak growth, and stymied entrepreneurship and initiative. Famines, lack of investment, and poverty were the result.

But In the early 1990’s, the country changed course and started to open up its economy to the world. Personal marginal tax rates have fallen from 50% to less than 30%. Tariffs and import quotas were slashed, exports are growing at a 20% annual rate, with America being its largest market. Only 10% of its economy is dependent on international trade, insulating it somewhat from external shocks. The banking system is much improved, and non-performing loans have dropped to less than 4% of total bank loans. It has fiscal crisis to accumulating $135 billion in foreign exchange reserves

Also , With the market capitalisation crossing $1.6 trillion within a couple of months after piercing the magical $1 trillion mark, and a vibrant equity derivatives segment to boast, the Indian stock markets look much attractive in terms of depth as well, they add. The equity derivatives market in China is only a recent start and is yet to catch momentum.

“The entire world seems to be looking at investing in India. China is an entirely different market. The Chinese market is about a few large state-owned companies dominating the entire business. India is not that. India is about a large number of entrepreneurs having presence in every sector competing with each other and making their market,” explains Manisha Girotra, the managing director and chairperson of UBS.

For instance, in the banking sector, there are three large banks in China; that is very much the banking sector of that country. In contrast, India has several banks — large, medium and small — competing with each other for business across the country.

“China is a state-owned, state-led economy while we are entrepreneurial, capitalist and private-sector-led economy,” she says.

With a price to earnings multiple of 50-plus times too, China is much more expensive and there is enough reason to believe foreign investors find India much attractive. The Bombay Stock Exchange’s Sensex commands a price to earnings multiple 25 times at current earnings.

Explains Paul Parambi, the head of Kotak’s International Business: “Chinese markets are driven by domestic liquidity. We are miles ahead of the curve. India has a fairly sophisticated equity culture.”

Adds Ajay Bagga, the CEO of Lotus Mutual Fund: “Our capital markets are much more diversified, while Chinese markets are led more by manufacturing and infrastructure sectors.”

With the Securities and Exchange Board of India (Sebi) planning new products such as Indian Depository Receipts (IDR), the coming year will see multinational companies having presence in the country, tapping that market to list on the local exchanges, adding to the profile of Indian markets.

“We are in initial stages of talks with MNCs for IDRs. You could see MNCs listed on the New York Stock Exchange opting for dual listing by listing on BSE and NSE,” said a senior investment banker on condition of anonymity.

So we are in a market which is more diverse than any other which provide us much better opportunities.