SSE, SENSEX vs S&P, DOW
The talk of emerging markets has been on everyone’s lips for the last few years, and the talk should keep becoming louder and louder in the future–especially where China and India are concerned. These two countries undoubtedly represent the future for emerging markets, and their respective stock markets have, over the past couple years, shown the growth that has been underway. When we talk about these two countries, we are talking about two countries that represent roughly 40% of the world’s population. Think of it this way: the population of either of these countries is roughly the same as all the Americas and Europe combined. It’s no wonder that Wall Street and investors are so bullish on these two. Based on population alone, it seems like a no-brainer. When 40% of the world comes online everyone wants in. Mix in a wealth of natural resources, strong national identities, and a workforce that is growing in professionalism, size, modernity, and resources and you really see why so many people are jumping on the bandwagon.
If recent history is any indication, huge gains could continue to be seen. Let’s look at the past two years of the indices of China and India–the Shanghai Composite (SSE), and the SENSEX in Bombay. In September of 2005, the SSE was at 1200; today it stands at 4627 points, just under 4X in two years. The SENSEX, in September 2005, was just under 8000. Just a couple of weeks ago, the index was just a few points away from hitting 16,000. The recent pull back has left it at 14,900, but the point is that the Indian index has almost doubled in the same time. Unbelievable returns! Oh and the DOW and S&P? They too have had good returns over the same period, around 25% or so. Here is a graph showing the comparison.
Sure the U.S. indices are doing well–most people would settle year-in, year-out for 13% on their money–it now appears that while the U.S. is old reliable, China and India are the young blood, and the movers and shakers. They are certainly where the action is!
Filed under: World Markets, DOW
