Latest / Best of Business / Sam Dickie: Fisher Funds expert on the benefits and drawbacks in investing in the Indian economy

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Sam Dickie: Fisher Funds expert on the benefits and drawbacks in investing in the Indian economy · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk SEDB. Follow
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  Speaker 1: Ryan Bridge.
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  Speaker 2: India's economy India, that is, its economy is massive. GDP
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  Speaker 2: is four point three trillion dollars in twenty fifteen it
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  Speaker 2: was two point one. That means it's doubled in ten years,
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  Speaker 2: growing six point eight percent this year. That's what they're expecting.
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  Speaker 2: Huge potential for exporters, for investors too. They've got a
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  Speaker 2: stock market there, but it does have an achilles heel
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  Speaker 2: and investors should know about it. Sam Dicky Fisher funds
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  Speaker 2: with US Tonight. Hey Sam, Good evening. Ryan. First of all,
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  Speaker 2: it is a pretty impressive beast the Indian economy, isn't it.
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  Speaker 2: I mean, just the trajectory that it's on it.
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  Speaker 3: Is a miracle. It's not just the sheer size of
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  Speaker 3: it and almost one and a half billion people, but
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  Speaker 3: it's the youth and vibrancy of that population. So the
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  Speaker 3: median age in India is around twenty eight years of
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  Speaker 3: age versus almost forty in the US New Zealand. So
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  Speaker 3: the world's largest youth population is entering their prime earning
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  Speaker 3: years and it's got access to critical natural resources like
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  Speaker 3: iron ore to make steel and abundant coal to power
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  Speaker 3: the growth. Plus the fact that's a democracy and is
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  Speaker 3: another country almost the same size it isn't it a democracy?
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  Speaker 3: And that has combined to double GDP in the last decade,
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  Speaker 3: which is miles faster than most countries on Earth.
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  Speaker 2: So what about the stock market and in the what's it?
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  Speaker 2: I mean, we don't talk about it a lot here.
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  Speaker 2: What's it like?
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  Speaker 3: It is very vibrant. So I'll just give you a
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  Speaker 3: couple of numbers there, Ryan, The overall value of the
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  Speaker 3: stock market is more than one hundred percent of the
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  Speaker 3: size of the economy, so more than one hundred percent
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  Speaker 3: of GDP. And that is similar to very developed stock
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  Speaker 3: markets like the US and Australia. And the retail investor
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  Speaker 3: over there is very active, so mum and dad, they
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  Speaker 3: love it. Fifty percent of trading volume is driven by
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  Speaker 3: these retail investors versus more like twenty percent in the US,
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  Speaker 3: and they're super tech savva. Well, so eighty two percent
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  Speaker 3: of all stock market trades are done via mobile apps,
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  Speaker 3: miles ahead of most Western stock markets.
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  Speaker 2: Wow, what's the risks?
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  Speaker 3: There's always risks? So the Achilles heel for India is
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  Speaker 3: too fold. The first one is with tiger growth that's
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  Speaker 3: sort of eight percent growth they've been achieving, can come
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  Speaker 3: tiger inflation, and in fact it can all be kickstarted
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  Speaker 3: by oil. So India needs to import around half of
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  Speaker 3: its energy needs and that can feed on itself. So
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  Speaker 3: think about this. As the oil price goes up in
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  Speaker 3: US dollars, that drives up domestic Indian inflation, which in
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  Speaker 3: turn weakens the currency or the Indian rupee, which in
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  Speaker 3: turn makes the imported oil more expensive and roupee terms
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  Speaker 3: and so on and so forth, so it feeds on itself.
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  Speaker 3: It's otherwise known as the oil inflation currency trap of India,
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  Speaker 3: and the second Archilles heel is and this is a
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  Speaker 3: little bit of motive, but it's called the educated unemployed
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  Speaker 3: time bomb. So twenty nine percent of graduates unemployed, which
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  Speaker 3: is nine times higher than the uneducated unemployment, right right,
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  Speaker 3: And when you think about twelve million youths a year
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  Speaker 3: graduating and entering the labor market, and a lot of
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  Speaker 3: them want to be computer engineers, and considering AI can
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  Speaker 3: code faster than any trainee computer engineer, it's a problem.
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  Speaker 3: And all of this is supercharged by the exceptional inequality
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  Speaker 3: in India, so an unusually tiny proportion of people hold
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  Speaker 3: the vast majority of wealth.
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  Speaker 2: Yeah, even that GDP number, you know, it sounds so
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  Speaker 2: massive and impressive, but in terms of GDP per capita,
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  Speaker 2: they're like one hundred and fiftieth in the world, aren't they.
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  Speaker 2: I mean, you've got to remember just how big the
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  Speaker 2: population is in relation to that, right.
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  Speaker 3: That's right, And the penetration of things like consumer banking
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  Speaker 3: and things are very low, so there's a long way
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  Speaker 3: to go, but they're moving pretty rapidly. So I think
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  Speaker 3: they're probably the fifth biggest economy in the world today,
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  Speaker 3: am by twenty fifty expected to be the biggest economy.
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  Speaker 3: So they are on the charge.
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  Speaker 2: Now where does what does all of this mean for investors?
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  Speaker 3: Well, the amazing thing about economies like India that are
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  Speaker 3: starting from behind the Western world is with modern day technology,
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  Speaker 3: they can actually leap frog the West because these young,
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  Speaker 3: vibrant consumers are hungry for information and tech savvy. So
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  Speaker 3: you've got high internet and mobile usage, you've got cash
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  Speaker 3: less payments. Think how how recently we went to cashless payments.
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  Speaker 3: Cashless payments and very very remote villages in India, all
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  Speaker 3: creating the world's largest digital public infrastructure. And overall, there
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  Speaker 3: some phenomenal companies in India, and it is a tiger
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  Speaker 3: economy that grows rapidly. But just watch those Archilles heels. So,
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  Speaker 3: for example, if if you are invested in India and
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  Speaker 3: you started to see the oil price shoot up, keep
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  Speaker 3: an eye on the Indian rupee for signs of abnormal
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  Speaker 3: weakness and that can drive down the stock market.
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  Speaker 2: Fascinating stuff, Sam, Thank you very much for that update.
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  Speaker 2: We've been talking a lot about in there in the
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  Speaker 2: last couple of months. That's good to get an insight
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  Speaker 2: into the stock market too, Sam Dicky Fisher funds
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