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Sometimes Size is Relevant…

 …especially where populations are concerned.
The three largest populations in the world are:

China India USA
In Millions 1,374 1,267 324
Real GDP Forecast 2017 (OECD) 6.4% 7.6% 2.3%
Democracy No Yes Yes
Central Bank Integrity ? Yes Yes
2017 Current Account/GDP US$ (OECD) +2.4% -0.9% -2.6%
Median age of population 37.1 27.6 37.9

Where’s your money?
This represents a simple set of data but post Modi’s landslide victory in Uttar Pradesh* at the weekend which cemented his leadership position at the head of the BJP Party and the Indian government, the transformation of the Indian economy under Modi’s leadership looks set to continue.
Equity investors and asset management companies will be reviewing their country weightings, debating how many more US rate increases there will be in 2017 and trying to predict which number will follow the decimal point after the figure 2 for US growth this year.   Bear in mind that this cerebral exercise is largely driven by the fact that the US equity market represents 54% of the MSCI All Country World Index. All top ten companies by weight in that index are US based.
Of course, US companies can benefit from the growth in China and India but the widespread beneficiaries of the Indian metrics above are likely to be Indian companies. Looking at the world by market capitalisation indices might help some run large amounts of investors’ money but not necessarily avail those investors of a wider opportunity set where the demographics are supporters of economic growth not inhibitors.
We have held a specific allocation to Indian equities in our Growth Fund since mid-2015 and topped up our weighting post the monetisation sell-off.
*In global terms, if Uttar Pradesh is ranked as a country, it would rank as the fifth in population size – ahead of Brazil and behind Indonesia.

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