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"StockBreakthroughs Newsletter"

June 13, 2005.

In this issue...

Emerging Market - India.

At this point in time the big trading pit for a lot of speculative traders is China. A huge emerging market with lots of chances for profits, but also for huge losses.

But another giant is awakening in the shaddow of China:

And that's India.

The Deutsche Bank reckons that in the next 15 years, India is going to be the strongest economy worldwide. For more than a decade now, India's economy has increased by at least 4% per year. In 2003 it was even 8% and in 2004 7%.

For an emerging market, India has a very high level of education. It has the second largest number of academically-trained people in the world. 300.000 engineers and IT-experts
graduate annually.

With a population of more than 1 billion, India also has a huge workforce potential with an average age of 25. A lot of them speak English which is good for the service sector and above all, the software and computer industry.

And labour in India is still very cheap. Dirt cheap! An engineer that has just come from university has an income of only about $200.- per month working 6 days a week. That makes India extremely competitive.

But that's not all. International company's and global players like Microsoft, SAP, HSBC Bank, Nokia etc. have already got foot in the door. McDonalds has been in India for
10 years now and still continues to expand.

Also the stock exchange in Bombay is booming with more than 6000 stocks to choose from.
In the last 2 years, Indias stock exchange index Sensex has more than doubled. And the interest for Indian stocks is increasing. 14 billion Dollar were invested in the market in 2004. Even private investors are investing their capital in India.

THE RISKS:

Although India's economy is growing strongly and the Indian stock market is booming, one
shouldn't underestimate the risks.

A year ago investors pushed the panic button and the stock market dropped by 15% in one day
when the communists became part of the government. Often investors must always rekon with a
much colder wind blowing in their face when investing in emerging markets in contrast to
other markets like the USA or Europe.

The weather also plays a crucial role for the economy. The agricultural sector still makes
out 20% of the total gross domestic product. Should a drought sweep over the land or should
the monsoon bring too little rain,India could face a serious crisis.

The budget deficit shouldn't be underestimated either. In order to keep economic growth high, the government spends more money than it receives. Thereby the country's debt becomes more and more. In addition, many billions disappear into the dark channels of corruption.

One should also not forget the political risks. like the Kashmir conflict with Pakistan that's been going on for years. Many times already, India and Pakistan got themselves tangled up in a war over this region.

If you want to have a piece of India in your portfolio and don't want to take too much risk, then instead of investing in an Indian corporation rather go for the big international companies. They are already present in India and are profiting from it's economic boom. And by investing in companies like Nokia, General Electric, etc. you will automatically also profit from Indias growing economy without carrying too much risk on your back!


Yours in Successful Trading,

Ricky Schmidt

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