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Speaker 1: Brian 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.

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Speaker 1: It is a miracle. It's not just the sheer size

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Speaker 1: of it and almost one and half bidding people, but

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Speaker 1: it's the youth and vibrancy of that population. So the

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Speaker 1: median age in India is around twenty eight years of

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Speaker 1: age versus almost forty in the US and New Zealand.

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Speaker 1: So the world's largest youth population is entering their prime

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Speaker 1: earning years. And it's got act says to critical natural

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Speaker 1: resources like iron ore to make steel and abundant coal

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Speaker 1: to power the growth, plus the fact that it's a

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Speaker 1: democracy and is another country almost the same size it

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Speaker 1: isn't it a democracy? And that has combined to double

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Speaker 1: GDP in the last decade, which is miles faster than

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Speaker 1: 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 1: It is very vibrant. So I'll just give you a

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Speaker 1: couple of numbers there, Ryan. The overall value of the

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Speaker 1: stock market is more than one hundred percent of the

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Speaker 1: size of the economy, so more than one hundred percent

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Speaker 1: of GDP. And that is similar to very developed stock

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Speaker 1: markets like the US and Australia. And the retail investor

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Speaker 1: over there is very active, so mum and dad, they

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Speaker 1: love it. Fifty percent of trading volume is driven by

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Speaker 1: these retail investors versus more like twenty percent in the US.

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Speaker 1: And they're super tech savvy as well, so eighty two

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Speaker 1: percent of all stock market trades are done via mobile apps,

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Speaker 1: miles ahead of most Western stock markets.

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Speaker 2: Wow, what's the risks?

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Speaker 1: There's always risks. So the Achilles' heel for India is

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Speaker 1: two fold. The first one is with tiger growth that's

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Speaker 1: sort of eight percent growth they've been achieving can come

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Speaker 1: tiger inflation, and in fact it can all be kickstarted

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Speaker 1: by oil. So India needs to import around half of

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Speaker 1: its energy needs and that can feed on itself.

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Speaker 2: So think about this.

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Speaker 1: As the oil price goes up in US dollars, that

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Speaker 1: drives up domestic Indian inflation, which in turn weakens the

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Speaker 1: currency or the Indian rupee, which in turn makes the

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Speaker 1: imported oil more expensive and roupee terms and so on

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Speaker 1: and so forth, so it feeds on itself. It's otherwise

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Speaker 1: known as the oil inflation currency trap of India and

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Speaker 1: the second Archilles heel is. And this is a little

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Speaker 1: bit of motive, but it's called the educated unemployed time bomb.

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Speaker 1: So twenty nine percent of graduates unemployed, which is nine

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Speaker 1: times higher than the uneducated unemployment right right, And when

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Speaker 1: you think about twelve million youths a year graduating and

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Speaker 1: entering the labor market, and a lot of them want

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Speaker 1: to be computer engineers, and considering AI can code faster

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Speaker 1: than any trainee computer engineer, it's a problem. And all

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Speaker 1: of this is supercharged by the exceptional inequality in India.

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Speaker 1: So an unusually tiny proportion of people hold the vast

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Speaker 1: 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, That's right.

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Speaker 1: And the penetration of things like consumer banking and things

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Speaker 1: are very low, so is a long way to go,

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Speaker 1: but they're moving pretty rapidly. So I think they're probably

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Speaker 1: the fifth biggest economy in the world today and by

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Speaker 1: twenty fifty expected to be the biggest economy. So they

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Speaker 1: 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 1: Well, the amazing thing about economies like India that are

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Speaker 1: starting from behind the Western world is with modern day technology,

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Speaker 1: they can actually leap frog the West because these young,

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Speaker 1: vibrant consumers are hungry for information and tech savvy. So

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Speaker 1: you've got high internet and mobile usage, you've got cashless payments.

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Speaker 1: Think how recently we went to cashless payments, cashless payments

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Speaker 1: and very very remote villages in India all creating the

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Speaker 1: world's largest digital public infrastructure and overall some phenomenal companies

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Speaker 1: in India, and it is a tiger economy that grows rapidly,

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Speaker 1: but just watch those Archilles heels. So, for example, if

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Speaker 1: if you are invested in India and you started to

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Speaker 1: see the oil price shoot up, keep an eye on

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Speaker 1: the Indian rupee for signs of abnormal weakness and that

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Speaker 1: can drive down.

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Speaker 2: The stock market. Fascinating stuff. Sam, Thank you very much

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Speaker 2: for that update. We've been talking a lot about in

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Speaker 2: there in the last couple of months, so it's good

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Speaker 2: to get an insight into their stock market too. Sam

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Speaker 2: Dickey Fisher Funds. For more from Hither Duplessy Allen Drive.

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