India has been recently ranked as the second most preferred equity investment destination among the emerging markets in 2019 after Brazil, according to a survey conducted by Bloomberg, a media company based in New York, pertaining to global investors and traders across the world in 2018 (Survey), as per various newspaper reports. The other emerging economies include Indonesia, China, South Africa, Argentina, Russia, Mexico, South Korea.
The Survey, reportedly, showed that the earnings growth in India is expected to be around 27% in 2019. As per the Survey, investment in India may rise in 2019 based on the following factors:
Lesser aggressive Federal Reserve System of The United States of America (USA)
Corporate growth in USA
Rise in earnings in India
Thus, if the Federal Reserve System of USA becomes less aggressive, then there would a lesser raise or hike in interest rates of borrowing by banks from the Federal Reserve of USA, as a result of which the borrowing capacity of the businesses, customers, etc from the banks would be higher. Therefore, the companies may be able to borrow higher amounts of loan from banks at lower rates of interest and use the loan to grow and expand their business, increase their earning, gain a positive image or goodwill in the eyes of the global investors, etc. As a result, this would prompt a greater number of global investors to make equity investments in emerging markets worldwide and help in growth of earnings of the developing countries as well.
As per various newspaper reports, India had attracted USD 22 Billion foreign direct investment (FDI) in 2018 and was one of the top economies to have received the most FDI in 2018.
But experts believe that the only biggest risk in the growth of investments in India is the uncertainty over the outcome of general elections in India in 2019.
Nevertheless, the Survey predicts that the earnings growth in India may become the highest amongst the emerging economies in 2019 and that India would become the second most preferred emerging market for equity investments in 2019.
Senior Legal Associate
The Indian Lawyer