Emergence of ASIA-Middle East

I think soon the Economic power will shift to Asia (including Japan) and Middle East Region specifically. I would like to be say that in future I see Dubai, Egypt, Hong Kong, Singapore and Mumbai as the upcoming international financial centers. And among these specially Dubai, Singapore and Hong Kong. The cash rich OPEC countries are spending heavily on tourism and infrastructure. UAE has completely transformed itself in last decade, and is making most of its windfall gains from high crude prices. It is targeting itself to be one of the most sought after tourist destinations in the world. Most of the I-Banks and other industries are increasing concentrating on Dubai as its base to cater to the Middle East countries. They are hiring in a big way in Middle East and soon the senior management would handle the company affairs from Middle East base.

I think investing in Indian Stock markets are better than its Asian peers. I know, many of you may say I am wrong and China is the place. Please bear and give me a chance to justify my answer. China like other Asian economies viz Singapore, Malaysia etc is export oriented economy. India on other hand is a domestic consumption driven economy. It still has high Balance of Payments deficit, reason it imports crude in high volumes. And in addition, its exports don’t match its imports. Off late, the deficit in current account has been matched with surplus in the capital account, thanks to the FII and booming stock markets. But again, with FII withdrawing money, rupee has depreciated vis-à-vis dollar and foreign kitty has been reduced. But still, I feel rupee is in a long term appreciation trend and once the unwinding in the credit markets is done with, dollar will depreciate further. What makes India an attractive destination to me is its young population. It has a high proportion of its population who are in their middle ages and are spending high proportion of their income on luxuries and other consumer durables, making India less affected by slowing demand from export markets. The other thing, which has recently turned into India’s favour is 123 agreement. Since long, the shortage of energy has withheld the development of rural areas and there are power cuts in many parts of India and many areas have no access to electricity. Nuclear energy is a clean and green energy and will reduce India’s dependence on crude to some extent and make the demand for crude from inelastic to elastic in long run. Though the advantages of this deal will take 3-4 years to start accruing but it’s a positive step and this is Manmohan Singh’s greatest achievement I guess. He took a tough decision and even risked his Chair. He will be remembered as a man who single handedly turned Indian Economy, which was in a terrible state in 1991 to India which is looked upon by world as the fuel for the growth of world economy. Economics always says that the impact of policy decisions will accrue in the long run. His financial sector reforms in 1991 set the stage for growth in 2000’s and now 123 agreement will provide new impetus to growth in India.