Investment Asias New Jewel

China is in its glory, now look to the future.

Let's discuss an Asian country that could provide the second great bull market of the 21st century - an opportunity that has the potential to be a better investment than even China!

Like China, this country has been stuck with a failed economic system for over 50 years. It 'been a bureaucratic, socialist state which led to weak growth and hampered entrepreneurship and initiative. Famine, lack of investment, and poverty were the result.

But in the early 1990s, the country has changed course and began to open up its economy in the world. rates of staff in the country marginal tax rate fell from 50% to less than 30%. Tariffs and import quotas were reduced, exports are growing at a rate of 20% per year, with America being its largest market. Only 10% of its economy depends on international trade, somehow insulated from external shocks. The banking system is much improved, and loans have dropped to less than 4% of total bank loans. Has rapidly moved from a deficit of balance of payments accumulated 135 billion U.S. dollars in foreign reserves.

Unlike China, is a functioning democracy with respect for property rights and the rule of law. Many of its citizens have English as their mother tongue. Financial markets has also more advanced than China, and a stock market established in 1870, has 6,000 listed companies.

All demographics and right macro trends

It 'a very young nation with 80% of its population under 45 and - this is amazing - 25% of all persons under 25 and in the world live in this country a! Its citizens are thrifty with money to spend at a rate of 28% savings to support capital investment. Consumer credit is rapidly becoming available and fueling more consumer spending and retail sales amounted to 180 billion U.S. dollars last year.

Economic growth is already impressive 8.2% last year and 7% in 2005. GDP per capita adjusted for price is greater than that of China and its rate of GDP growth has averaged 6% over the past 10 years. Fifty per cent of its production comes from services and world-class IT, media advertising, entertainment and pharmaceutical expertise.

the country's space program has launched 12 rockets consecutive without incident and put the world's first satellite into orbit mapping graphics earlier this year. E 'became a close ally of the United States recently signed a defense pact and placing a huge order with Boeing, while considering the purchase advanced F-16 and F-18 fighters. President Bush, not a great traveler, he plans to stress the importance of strong bilateral ties to visit this country by the end of this year.

Most populous democracy in the world 's

You've probably guessed by now that the country we are discussing is India - the largest democracy in the world.

Certainly India has its challenges: the large infrastructure needs, red tape and a frustrating tendency for the government to hang on large companies, to name a few. Still, compared to China, India does not get much attention if not for the issue of outsourcing and is - for now - largely under the radar screen of even many sophisticated investors. India, 30 company Bombay Sensitive Index (Sensex) index was up 22% this year and broke the 8,000 barrier just last week. Most of the purchases was made by foreign institutional investors from the United States and, more recently, Japan.

The challenge with investing in India right now evaluations of leading companies and limited investment options. Assessment is always a little 'in front of you with commercial enterprises Sensex approximately 14-16 times projected earnings next year versus 11 times for emerging markets in general.

Morgan Stanley India Fund (IIF) is a closed-end fund that invests in blue chips in India and 97% in the last 12 months and 39% so far this year. It 's a bit expensive right now and trades at a premium of 14% to net asset value so caution is recommended until the award is reduced to the historical average to a low single digit. There are only eleven Indian ADRs trading on U.S. exchanges and are also expensive and trade at a premium price on the market price in India. The only exception could be Tata Motors (TTM), which trades on the NYSE at a price of $ 11.50, has a dividend yield of 4% and markets about 13 times 2006 consensus earnings estimates.

How to play opportunities

Information is available to help you navigate to invest in Asia-Pacific region. Unfortunately, many of us rely on the newspaper and evening news. There are no sources, such as the "Asia Investor Intelligence", which give much more educated and specific advice.

So if you act now? For investors the right, there are long-short funds that focus more on small-and medium-sized companies India, which tend to be much better values, have not participated in the recent run up in prices and are even more isolated from global capital flows. These funds can also hedge against companies with unsustainable valuations and pillow inevitable pullback in the market. Be patient - there is no doubt will be great investment opportunities and new investment vehicles to take advantage of this great secular bull market.

India presents investors the opportunity of a lifetime and its democratic government, stronger financial system, market interest rates and history of compliance and intellectual property rights can make a game better in the long term in China.