Friday, October 26, 2007

Go East Young Man

Another interesting item from Fullermoney:

Emerging markets represent 86% of the world's population, 75% of the world's land mass, 70% of the world's foreign reserves; 52% of world GDP, yet only 9% of world equity market capitalisation.

This staggeringly low equity capitalisation of only 9% might conceivably make sense if emerging markets were rapidly declining in GDP relative to the developed world. However the opposite is true. I can only conclude that emerging market equity capitalisation will soar relative to the developed countries over the next several decades, eventually reaching 70% to 80%.

I spent half of the last three years training traders in India. The growth and dynamism is stunning. India has a long way to go and many obstacles, not the least of which is resistance to change by corrupt political interests, but India is going to continue to advance at a tremendous rate. The China story is even more publicized. Tlhese markets have advanced a long way but they will keep going for years, interrupted occasionally by volatile shakeouts.