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Monday, October 18, 2010

Wealthiest Nations of the World

Despite all the bad economic news coming out of the developed world, the fact remains that they are way ahead of the emerging nations. The below chart shows the wealthiest nations in terms of a share in world wealth. As expected, the US and Western European nations lead the pack.

Note: The wealth denotes the sum total of the wealth of all citizens in respective countries.

However, the rate of growth in wealth is much higher in emerging nations, especially China. Ten years ago, the dragon nation was on the seventh place on the list. Today, it occupies the third spot.

By 2015, it is expected to dislodge Japan at the second spot. India's wealth has also grown fast. It has tripled over the last decade and is expected to grow another 80% by 2015. But it still pales in comparison to the dragon nation. China is nearly five times as wealthy as India.

Speaking of inflow of foreign money into Indian stock markets. It is all driven by foreign institutions. Not individuals. At present, foreign investors with a net worth of over US$ 50 m can register as sub-accounts of a foreign institutional investor and buy Indian stocks. Alternatively, they can come through India-focused funds. That could change.

The finance ministry is looking into a proposal that would allow overseas retail investors to invest directly in Indian equity markets. Such a move would also require the approval of RBI and SEBI. We are not big fans of FIIs, given their herd mentality. While it remains to be seen how foreign retail investors behave, we do expect them to be a more stable investor class.