The Growth Map                   Kolkata , October 9 2012. Edition XXVIInvest and ProsperChapter 9Jim O’ Neill            ...
DO YOUKNOWWHATAREBRICs
In economics, BRIC is an acronym that refers tothe countries of Brazil, Russia, India and China
• The acronym was coined by Jim  ONeill, global economist at Goldman  Sachs, in a 2001 paper entitled "Building  Better Gl...
• 25% of the worlds land coverage• 40% of the worlds population and• Combined GDP of $18.486 trillion• Embrace global capi...
GROWTH MARKET CONCEPT AT GOLDMAN SACHS. WHY ARE WE NO MORE EMERGING MARKETS?
The Growth Map                   Kolkata , October 9 2012. Edition XXVIGrowth Market Concept       at Goldman SachsJim O’ ...
Growth market concept of Goldman Sachs• Growth market economies will be the driver of  the world economy in the coming dec...
WHY THE BRICS ARE NOT CONSIDEREDEMERGING MARKETS ANYMORE• In 2001 and 2002, real GDP growth in large  emerging market econ...
• World policymaking forums should be re-  organised and in particular, the G7 should be  adjusted to incorporate BRIC rep...
• BRICs to increase their contribution to global  domestic demand through higher consumption.• Real retail sales in the BR...
• Recently, BRICs have continued their climb up the  global rankings of economies by size, as measured  by US $ GDP.• Chin...
Investing in BRICs
The Growth Map                   Kolkata , October 9 2012. Edition XXVIINDIAJim O’ Neill’s                                ...
• INDIA is the greatest mystery among the  BRICs!!!• We’re populous, resource-rich and  entrepreneurial.• Its demographics...
• Private initiative led to IT sector  growth.• The Right to Information Act is  increasing the transparency and  accounta...
The Indian Billionaires are the face of the economy outside which attracts a lot of  investments due to its self-sufficien...
BUT THEN THE QUESTION ARISES WHAT IS STOPPING          INDIA FROM GROWING FULLY• The scale of poverty is very high and Ind...
SO WHAT IS NEEDED???• Making the growth process more inclusive  and balanced• Improving physical infrastructure• Developin...
• Financial sector reforms are also needed to  improve the intermediation of India’s large  private savings.• The governme...
THE INDIAN CAPITAL MARKET SCENARIO• The capital market in INDIA has also played its  own role in the development. The bond...
• The non-uniform stamp duty prices and long  gestation have retarded the growth in this  sector.• The lack of transparenc...
By 2016 the INDIAN debt market, public orprivate could reach $1.5 trillion. But for this tohappen at a faster pace        ...
• Lower the high disclosure requirements• Improve the legal framework for contract  enforcement• Lift restrictions on fore...
It is perhaps as     simple and as   difficult as this –INDIA must wrestlein so many areas to      change andadvance, beca...
The Growth Map                   Kolkata , October 9 2012. Edition XXVIBRAZILJim O’ Neill’s                               ...
PROS:• Brazil today is the most popular of the  BRICs so far as foreign direct investment is  concerned• Brazil has always...
• Fifth largest population in the world• Young and growing population• Brazil has the potential to overtake  Germany & Jap...
CONS:• Currency rising therefore slowing down  the manufacturing part of the economy• High interest rates• Centralized pol...
The Growth Map                    Kolkata , October 9 2012. Edition XXVIRUSSIAJim O’ Neill’s                              ...
RussiaPROS:• Russia is the worlds largest country  in terms of territory• A consumer market of over 140 million  people
• Middle class: -68% in Russia (100 million people) - 31% in Brazil (75 million people) - 13% in China (160 million people...
•   Vast natural•   Large energy and mineral resources•   A highly educated workforce•   Technologically advanced research...
• Russia is today one of the most financially stable  countries in the entire world, with among the  lowest levels of sove...
Russia• Cons• Unfavorable demographics - population decline  due to emigration, HIV, rising death rates and  falling birth...
• Politics represents the biggest investment risk:  Yukos was forced into bankruptcy!• . In 2003, Mikhail Khodorkovsky, CE...
The Growth Map                    Kolkata , October 9 2012. Edition XXVICHINAJim O’ Neill’s                               ...
• China is the biggest of all the  BRIC nations. In fact, there  would be no BRIC story without  China.• GDP grew from $50...
• Projected to be world’s  largest economy by 2027.• Holds more than $ 3 trillion  in foreign exchange  reserves, close to...
Equity Market• Shanghai stock exchange is the 5th  largest in the world by market  capitalization at U.S.$2.3 trillion  as...
Recent reforms in June this year by the Chinasecurities and regulatory Commission (CSRC) hassought to bolster investor con...
Debt Market or Fixed income marketIt is said that the richer acountry becomes, themore it borrows. TheChinese bondmarket, ...
Characteristics of the debt market in China:• Debt markets are still dominated  by Government debt• Consumers save rather ...
It is important to develop the bond marketbecause:• It would allow the financing and  sustaining of China’s boom.• It woul...
Private EquityWith Chinas stock exchanges inShenzhen and Shanghai still in anearly stage of development, privateequity and...
Real estate• Real estate was the most safe avenue  for investment.• Real estate prices rose very high and  there were chan...
The Growth Map                    Kolkata , October 9 2012. Edition XXVIPROSPECTSJim O’ Neill’s                           ...
Prospects• The existing prospects of the BRIC countries  are good for us all.• Apple is opening ore outlets in China. We  ...
• Wal-Mart is trying significantly to expand in the  BRIC Market, as is true for the UK’s Tesco. China  is setting up a ca...
The Growth Map                    Kolkata , October 9 2012. Edition XXVICONCLUSIONJim O’ Neill’s                          ...
• BRIC exposure• Nifty fifty• BRIC equity markets more difficult in comparison  to advanced markets• Growth of BRICs• Comm...
•   BRIC and N-11 economies have cyclical variation•   Capitalization of public companies•   Growth and asset returns in E...
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  1. 1. The Growth Map Kolkata , October 9 2012. Edition XXVIInvest and ProsperChapter 9Jim O’ Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countriesincluding the US, the UK and Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.
  2. 2. DO YOUKNOWWHATAREBRICs
  3. 3. In economics, BRIC is an acronym that refers tothe countries of Brazil, Russia, India and China
  4. 4. • The acronym was coined by Jim ONeill, global economist at Goldman Sachs, in a 2001 paper entitled "Building Better Global Economics”• Goldman Sachs argues that the economic potential of BRICs is such that they could become among the four most dominant economies by the year 2050
  5. 5. • 25% of the worlds land coverage• 40% of the worlds population and• Combined GDP of $18.486 trillion• Embrace global capitalism• China and India- suppliers of manufactured goods and services• Brazil and Russia -suppliers of raw materials.
  6. 6. GROWTH MARKET CONCEPT AT GOLDMAN SACHS. WHY ARE WE NO MORE EMERGING MARKETS?
  7. 7. The Growth Map Kolkata , October 9 2012. Edition XXVIGrowth Market Concept at Goldman SachsJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emergingforces of Brazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longer of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries thatbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compellingurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies. economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  8. 8. Growth market concept of Goldman Sachs• Growth market economies will be the driver of the world economy in the coming decade.• Goldman Sachs Asset Management (GSAM) has adopted the term “Growth Markets,” believing the traditional labels of “Developed” and “Emerging” countries no longer reflect the fundamental nature of the global economy today.• GSAM describes Growth Markets as any country outside the developed world that is responsible for at least 1% of global GDP.
  9. 9. WHY THE BRICS ARE NOT CONSIDEREDEMERGING MARKETS ANYMORE• In 2001 and 2002, real GDP growth in large emerging market economies will exceed that of the G7.• At end-2000, GDP in US$ on a PPP basis in BRICs was about 23.3% of world GDP. On a current GDP basis, BRIC share of world GDP is 8%.• Using current GDP, China’s GDP is bigger than that of Italy.• Over the next 10 years, the weight of the BRICs and especially China in world GDP will grow.
  10. 10. • World policymaking forums should be re- organised and in particular, the G7 should be adjusted to incorporate BRIC representatives.• The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By 2025they could account for over half the size of the G6. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.• By 2050. The largest economies in the world (by GDP) may no longer be the richest (by income per capita).
  11. 11. • BRICs to increase their contribution to global domestic demand through higher consumption.• Real retail sales in the BRICs much better than in the advanced economies over the past two years. By 2010, the BRICs will contribute almost half of global consumption growth.• Two billion people could join the global middle class by 2030, mainly from BRICs. China and India also set to dominate infrastructure demand over the next decade. Excellent opportunities for the best positioned companies from DM & EM markets. Two new ‘BRICs Nifty 50’ baskets to help access this opportunity.
  12. 12. • Recently, BRICs have continued their climb up the global rankings of economies by size, as measured by US $ GDP.• China moved past Japan to become the world’s 2nd largest economy. Brazil passed Spain and Italy to become the 7th largest economy, and is now fast approaching the UK. India and Russia both jumped over Spain to move into 9th and 11th positions, respectively.• China and India have experienced the fastest infrastructure growth rates. Russia hasmore advanced infrastructure in place than the others due to heavy investment during the Soviet era.
  13. 13. Investing in BRICs
  14. 14. The Growth Map Kolkata , October 9 2012. Edition XXVIINDIAJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emergingforces of Brazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longer of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries thatbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compellingurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies. economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  15. 15. • INDIA is the greatest mystery among the BRICs!!!• We’re populous, resource-rich and entrepreneurial.• Its demographics are astonishing and its economy is mostly driven by domestic demand thus cushioning it from global turmoil.• From being a provider of natural resources and labor, INDIA now also has an affluent middle class consumer market.• India’s private entrepreneurship has been instrumental in achieving 8–9% annual growth of the economy in recent years.
  16. 16. • Private initiative led to IT sector growth.• The Right to Information Act is increasing the transparency and accountability of government operations• The MGNREGA Scheme is a major step towards making growth inclusive.• India’s positive potential and image overseas, makes Equity market valuations very high
  17. 17. The Indian Billionaires are the face of the economy outside which attracts a lot of investments due to its self-sufficiency image.
  18. 18. BUT THEN THE QUESTION ARISES WHAT IS STOPPING INDIA FROM GROWING FULLY• The scale of poverty is very high and India’s federal structure does not allow for pan-India policy making.• INDIA’s literacy rates are by far the lowest.• Many foreign investors feel INDIA is difficult to break into.• The slow Indian bureaucracy shuns away even the potential investors like WALMART or TESCO.• Indian household credit is only 8% of GDP;
  19. 19. SO WHAT IS NEEDED???• Making the growth process more inclusive and balanced• Improving physical infrastructure• Developing the agriculture sector• Enhancing delivery of essential public services, such as education and health, to large parts of the population• Reduce corruption!
  20. 20. • Financial sector reforms are also needed to improve the intermediation of India’s large private savings.• The government also needs to raise social spending in the areas of education, healthcare and pensions• There is also a need to improve the investment structure
  21. 21. THE INDIAN CAPITAL MARKET SCENARIO• The capital market in INDIA has also played its own role in the development. The bond market in INDIA is typically classified into three categories---• GOVERNMENT BOND MARKET----- 85%• FINANCIAL BONDS--------------------- 10%• CORPORATE MARKET----------------- 5%• But the most underdeveloped part remains the corporate debt.
  22. 22. • The non-uniform stamp duty prices and long gestation have retarded the growth in this sector.• The lack of transparency around its capital markets, and private lending in India makes it impossible for public debt markets to develop when the need for it is immense.
  23. 23. By 2016 the INDIAN debt market, public orprivate could reach $1.5 trillion. But for this tohappen at a faster pace it needs to
  24. 24. • Lower the high disclosure requirements• Improve the legal framework for contract enforcement• Lift restrictions on foreign investors holding Indian corporate debt• Develop better settlement and clearing systems• Most important of all INDIA needs to decouple its debt market from its broader economic goals
  25. 25. It is perhaps as simple and as difficult as this –INDIA must wrestlein so many areas to change andadvance, because it is such a complex nation to lead and govern and all itsissues come to only one point- lack in LEADERSHIP.
  26. 26. The Growth Map Kolkata , October 9 2012. Edition XXVIBRAZILJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emergingforces of Brazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longerbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasinglyurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC nations have experiencedsignificant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred economic and social change, created new politicalstructures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further south and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UK and Japan would no longer of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries thatbe the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compellingurbanized and overflowing with raw materials and ambition - would overtake the largest Western economies. economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  27. 27. PROS:• Brazil today is the most popular of the BRICs so far as foreign direct investment is concerned• Brazil has always been popular as “the country of the future”• Vast territory• Abundant natural resources
  28. 28. • Fifth largest population in the world• Young and growing population• Brazil has the potential to overtake Germany & Japan• Brazil is now home to giant companies such as Petrobras,which launched the worlds largest share offering
  29. 29. CONS:• Currency rising therefore slowing down the manufacturing part of the economy• High interest rates• Centralized political leadership• Extreme slumps• Extreme violence• Corruption and inefficiency
  30. 30. The Growth Map Kolkata , October 9 2012. Edition XXVIRUSSIAJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made astartling prediction: the G-7 countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. Withglobalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly urbanized andoverflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have anations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compelling economic concepts of our time. He setseconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers. out the Next 11 concept for the set of fast-growing counBut what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further tries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic conceptssouth and east? of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  31. 31. RussiaPROS:• Russia is the worlds largest country in terms of territory• A consumer market of over 140 million people
  32. 32. • Middle class: -68% in Russia (100 million people) - 31% in Brazil (75 million people) - 13% in China (160 million people) - <3% in India (30 million people).• GDP/Capita: - Russia: $17,000 - Brazil:$11,600 - China: $16,100 - India: $3,700
  33. 33. • Vast natural• Large energy and mineral resources• A highly educated workforce• Technologically advanced research and production capabilities
  34. 34. • Russia is today one of the most financially stable countries in the entire world, with among the lowest levels of sovereign debt and an inflation rate of below 4%.• By enabling its treasury bonds – known as OFZs – to be settled through international clearinghouses, it is sweeping away regulatory barriers that have kept foreign investors away. This could trigger a $30-50 billion foreign investment into the ruble bond market•
  35. 35. Russia• Cons• Unfavorable demographics - population decline due to emigration, HIV, rising death rates and falling birth rates.• Excessive dependence on energy and raw materials• Poor record in governance and legal structures• Corruption and weak corporate transparency is another major ongoing risk for investors
  36. 36. • Politics represents the biggest investment risk: Yukos was forced into bankruptcy!• . In 2003, Mikhail Khodorkovsky, CEO of Yukos, one of Russias biggest and most successful oil companies was convicted, on trumped-up charges, to an eight-year jail sentence. Yukos was forced into bankruptcy, and its assets sold off for a fraction of its market value.• Poor infrastructure though large sporting events like the Winter Olympics in Sochi 2014, and the FIFA World Cup in 2018 could change all that.
  37. 37. The Growth Map Kolkata , October 9 2012. Edition XXVICHINAJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made astartling prediction: the G-7 countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. Withglobalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly urbanized andoverflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have anations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compelling economic concepts of our time. He setseconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers. out the Next 11 concept for the set of fast-growing counBut what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further tries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic conceptssouth and east? of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  38. 38. • China is the biggest of all the BRIC nations. In fact, there would be no BRIC story without China.• GDP grew from $500 billion USD in 1995 to a massive 7.52 trillion U.S dollars in 2011, averaging a fantastic 10% growth rate every year.• It is the 2nd largest economy in the world after USA and the only BRIC nation whose
  39. 39. • Projected to be world’s largest economy by 2027.• Holds more than $ 3 trillion in foreign exchange reserves, close to 50% of their own GDP, vastly larger than any country in the world.• Rising personal consumption, no longer an export and a low-cost labour phenomenon.
  40. 40. Equity Market• Shanghai stock exchange is the 5th largest in the world by market capitalization at U.S.$2.3 trillion as on December 2011• It is not entirely open to foreign investors due to tight capital controls exercised by the government.• It is also not very transparent leading to most Chinese investing in real estate or the shadowy world of underground lending.
  41. 41. Recent reforms in June this year by the Chinasecurities and regulatory Commission (CSRC) hassought to bolster investor confidence:• Increase in the amount of shares foreign investors can buy in an otherwise closed market.• Listed Companies urged to pay more cash dividends to shareholders.• Focused on improving fair play in the market and protecting
  42. 42. Debt Market or Fixed income marketIt is said that the richer acountry becomes, themore it borrows. TheChinese bondmarket, even though nowunderdeveloped, is at thethreshold of hugeexpansion.
  43. 43. Characteristics of the debt market in China:• Debt markets are still dominated by Government debt• Consumers save rather than borrow• Companies depend on bank lending, retained earnings or informal private transactions to fund expansion.• Chinas $666billion corporate bond market is just 9% of its GDP, whereas in developed G7 countries it is usually more than
  44. 44. It is important to develop the bond marketbecause:• It would allow the financing and sustaining of China’s boom.• It would divert risk from state owned banking system that provides 75% of the nation’s credit.• It would provide capital to the fast growing small and medium enterprises that comprises 60% of GDP and generates 50% of tax revenues.• It would provide alternate avenues of investment to China’s savers.
  45. 45. Private EquityWith Chinas stock exchanges inShenzhen and Shanghai still in anearly stage of development, privateequity and venture capital arenatural avenues of investment. Theprivate Equity business is alreadyhuge and is also growing rapidly.However, the problem is that thereis too much money chasing too fewdeals. The Blackstone group is anotable investment and advisoryfirm that has active programs in
  46. 46. Real estate• Real estate was the most safe avenue for investment.• Real estate prices rose very high and there were chances of it being a bubble.• The government enacted certain reforms from 2010 to prevent the bubble from occurring and prices slowly started falling in 2011.• The key drivers for real estate are GDP growth, strong urbanization trend and strong household income growth.
  47. 47. The Growth Map Kolkata , October 9 2012. Edition XXVIPROSPECTSJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made astartling prediction: the G-7 countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. Withglobalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly urbanized andoverflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have anations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compelling economic concepts of our time. He setseconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers. out the Next 11 concept for the set of fast-growing counBut what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further tries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic conceptssouth and east? of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  48. 48. Prospects• The existing prospects of the BRIC countries are good for us all.• Apple is opening ore outlets in China. We believe that one of the Shanghai Stores attracts even more visitors than their famous glass cube on the 5th Avenue in New York. The next decade will power the BRIC economies to be bigger than the US.
  49. 49. • Wal-Mart is trying significantly to expand in the BRIC Market, as is true for the UK’s Tesco. China is setting up a campus of Nottingham University. The expansion of educational products and services could and should become a huge opportunity for the west in both China and India.• Germany sees direct benefits from the BRIC consumer appetite for its cars. BMW, Mercedes, Audi, VW all are experiencing dynamic growth in their sales to the BRICS!• China alone has many billionaires compared to many countries put together.
  50. 50. The Growth Map Kolkata , October 9 2012. Edition XXVICONCLUSIONJim O’ Neill’s Neill book, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made astartling prediction: the G-7 countries including the US, the UK and Japan would no longer be the worlds economic powerhouses. Withglobalization, a new era would emerge in which the emerging forces of Brazil, Russia, India and China - populous, increasingly urbanized andoverflowing with raw materials and ambition - would overtake the largest Western economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRICnations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurredeconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers.But what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power furthersouth and east?In this landmark book Jim ONeill, chairman of Goldman Sachs Asset Management, shares his insights on how and why he developed onebook, The Growth Map has been an eyeopener. Ten years ago, Jim ONeill made a startling prediction: the G-7 countries including the US, the UKand Japan would no longer be the worlds economic powerhouses. With globalization, a new era would emerge in which the emerging forces ofBrazil, Russia, India and China - populous, increasingly urbanized and overflowing with raw materials and ambition - would overtake the largestWestern economies.The BRICs were born. No other economic idea has defined the 21st Century more powerfully or more accurately. In the past decade all four BRIC of the most compelling economic concepts of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have anations have experienced significant growth and are now among the top ten economies in the world. Jim ONeills single prediction has spurred BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria of the most compelling economic concepts of our time. He setseconomic and social change, created new political structures and challenged the thinking of business leaders, governments, and decision makers. out the Next 11 concept for the set of fast-growing counBut what does the future hold? Can the BRICs sustain their exceptional levels of growth? Which other nations will drive economic power further tries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeriaof the most compelling economic conceptssouth and east? of our time. He sets out the Next 11 concept for the set of fast-growing countries that could have a BRIC-like impact on the world (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria
  51. 51. • BRIC exposure• Nifty fifty• BRIC equity markets more difficult in comparison to advanced markets• Growth of BRICs• Commodity companies are great BRIC investments• Improved regulatory and legal frameworks• Rapid increase in the number of billionaires in BRICs
  52. 52. • BRIC and N-11 economies have cyclical variation• Capitalization of public companies• Growth and asset returns in ERP• Hardest questions for equity investors- invest in BRICs directly, or companies investing in BRICs??• Performance relative to a benchmark of the market• Careful judgment to ensure future earnings• Challenges?• UIDAI Great change in our current world!

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