Why China and India?

Size, growth and demand are three familiar refrains used to describe the extraordinary development of China and India as the world's two most populous nations become genuine economic powers.

Consider a recent study by the Carnegie Endowment for International Peace, a US-based think-tank, which has forecast that by 2050 the world's three largest economies will be:

1. China
2. USA
3. India

Most Australian investors will have some exposure to US companies, either directly or via their superannuation fund or other international managed fund. But how many can claim a healthy allocation to China and India? Given that Australian investors are known as under-exposed to emerging markets, the answer is likely to be very few.

But what a lost opportunity:

For emerging markets allocations, China and India are a great place to start and Greater Asia Investments Limited is providing a unique opportunity to share in this growth.

Both countries have plenty more development to come: China and India may account for 37.5% of the world's population, but currently only 9.2% of global GDP.
 
While it would be foolish to expect smooth sailing all the way, all forecasts point to growth in future:

• The International Monetary Fund expects that China and India will "continue to lead the way in terms of the Asian economic phenomenon with growth rates of 7.5% and 8.0% respectively" in 2010
• PricewaterhouseCoopers forecast that India's rapid growth could see it become the world's third largest economy by purchasing power parity in 2012, overtaking Japan.
• McKinsey thinks China could account for more than 25% of global consumption growth over the next 15 years (McKinsey Global Institute, "If you've got it spend it: Unleashing the Chinese Consumer", August 2009)
• McKinsey also forecast that Indian incomes will triple, and that India's aggregate consumption will quadruple, over the next 20 years (McKinsey Global Institute , "The ÔBird of Gold': The rise of India's consumer market", May 2007)
• India's domestic consumption as a percentage of GDP is now the highest in the Asia Pacific region, according to McKinsey Global Institute, coming in at 55% of GDP (China's domestic consumption is 36% of a much larger GDP)
• Chinese auto sales have reportedly outpaced the USA for the first time during 2009, with 1.11 million vehicles being sold in March 2009 alone, according to the China Association of Automobile Manufacturers
• Indian mobile phone subscriptions continue to rocket and are forecast to top 700 million by 2012, in fact there were 44.5 million new mobile phone subscribers in the first quarter 2009 (Telecommunications Regulatory Authority of India)

We can easily mount a strong case for China and India, but what has not been so easy for Australian investors is gaining direct access to investments in these two countries. Greater Asia Investments changes this, by allowing investors to benefit from what has been described as a "shift in the world economic balance of power".