Thoughts About India

Thoughts About India

In our recent Money Thoughts introducing the updated Economic Clock for India, we alluded to high end property transactions plunging: prices have got out of reach of the one million families earning US$ 25,000 - $50,000 per year. But, within residential, another sector is thriving.

Developers are leaving the high-end residential property market and are now targeting low class housing, because:

  • In India, there are 53 million families earning US$ 2,500 - $5,000 per year;

  • For these people, there is a shortfall of 20 million homes;

  • By 2010, an additional 22 million families should enter this income bracket by 2010, providing further demand for inexpensive housing, and

  • Gross margins for such housing are 20% (vs. 30% for the high-end homes), but developers can make up the shortfall by pushing the turnover chunk of the profits equation - by building large townships on non-prime land.

Of course, if people buy such homes, they need mortgages. According to the same newspaper article, bank exposure to mortgages has tripled in the last three years - to US$60 billion; however, this equates only to six percent of GDP, vs an equivalent of 50 percent in the UK and the US. This means that in India, there is plenty of room for the mortgage business to grow.

We just now have updated The Economic Clock™ for India. We leave this exercise squeamishly: the largesse of the Central Bank is too pronounced. Thus, buyer beware!

Asia: Strong currencies and The Economic Time

We all read about the euro getting ever-stronger against the US dollar. The same applies to sterling. We believe that superpower currencies must stumble, so what we are seeing now vindicates our view.

But what about Asian currencies? Which Asian exchange rate has outperformed the euro by way of appreciation against the US dollar? And how do you make money off this? Ever thought about the monetary and thus market implications of this?

For answers to these questions, go to