Subject: IC940609: India: way to go ... etc

From: "Gray Zhu, 800-289-2498, 212-279-6700" <[email-masked]>
Date: Thu, 9 Jun 1994 23:37:53 -0400 (EDT)

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panix.com does not allow me do massive mailing (to over 400 members).
no matter it is moot or not, I have no time to argue with or go to the
court with them. So we are in danger of discontinuation or disruption,
I am trying to find a new place for it.  We hope to get the support
from ifcss.org, otherwise this may be one of the last messages, let me
know if someone can help also. Last a few times, I sent duplicated
e-mails to some people on the list because of machine memory fault or
cannot fork problems (over number of processes limit), I had to redo
it after some had been sent, thank for your understanding and
corporation. -Gray
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==================    IC940609: Investment Club  ======================

1. Could you name a few india funds ? .................... Gray Zhu
2. Another view about Peter Lynch's WORTH article ........ Shiwei Xu 
3. Would you suggest some reading for beginners? ......... Gray Zhu
4. India - a long way to go .............................. Daniel X. Wu
_______________________________________________________________________
   (be sure to read the Disclaimer in the end if you have not read)

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1. Could you name a few India Funds?

>From: [email-masked] (Yuan Jiang) name a few india fund

Indeed, I think India was a sort of socialist country until recent.
That's why there was democracy but no money.  Its future should be
very bright.  Can you name several mutual funds which invest in
India?  I would imagin that it's better to rely on mutual funds
to invest abroad becayse they have the hard to get information.
Yuan

Gray: (not recommending) From the same FORBE article:

Open-end:

Greater India Funds (Eaton Vance)

Closed-end funds:

India Growth Fund  (?)
India Fund Inc. (Oppenheimer & Co.'s)
India Fund (Jardine Fleming)
India investment (Morgan Stanley)

note that buying closed-end fund is like buying a stock, you pay
commission rather than mutual fund sale charge. A closed-end mutual
fund is just like another company. The difference between AT&T and a
closed-end fund is that AT&T's business is telecommunication, the
fund's business is buying and selling stocks.
 
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2. Another view about Peter Lynch's WORTH article

>From: Shiwei Xu <[email-masked]>

Hi, Gray:

Regarding the Peter Lynch's article on WORTH, I would like to direct
your attention to the story in June 4 issue of New York Times on the
same topic if you are not aware of it.  From my memory, the essence 
of the piece was that government regulatory agencies of the security 
business deemed it unethical for the insiders of mutual savings banks
(officers, directors, etc.) reaping huge profits when they converted
these savings & loans organizations into public companies.  They in-
tentionally valued these banks below their real worth before public
offering, thus the stocks soared shortly after IPO.  The market value
of the options and warrants insiders allocated to themselves went up
substantially.  In light of this situation, government agencies intend
to put regulatory pressures on the waves of conversions of mutual 
saving banks into public companies.  Besides the limitations put on
the insiders of mutual banks, the tetative measures on the investors' 
side include a restriction of deposits in mutual banks within 100 miles
of residency.  So it looks like the opportunities here are not going 
to be as sizzling as outlined in the WORTH's article with the water-
ing down from government regulations.

Again, the above info is purely from my memory with the possibility 
of incorrect interpretation of the origial article.  All standard
disclaimers apply.         

-- 
SHIWEI XU
[email-masked]

>From: Yuhui Ren <[email-masked]>

Hi, I am very interested in becoming a member of your club. Can you
suggest anything to read in order to get some basic idea of the
investment opportunity?  Thank you.

Gray: read a book like "understanding Wall Street", and read a magzine
like MONEY regularly.  And those FAQ's suggested in the WELCOME
message.

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4. India - a long way to go

>From: "Daniel X. Wu" <[email-masked]>

Gray:

Your June 6 column "Introducing India Market" painted India as the next
nirvana for potential investors. Unfortunately, India still has a long
to get there. In terms of long term, high yield returns, China is still
the best bet. 

While your friend provided you with all the eulogies, the Wall Street
Journal, on the same day, had a report from New Delhi on India's
market, with a different tone. I thought you would be interested, I
enclose it here.

Sign me:

India-is-no-China

----------------------
India's Market Reform Requires Perspective
THE WALL STREET JOURNAL
Monday, June 6, 1994

NEW DELHI -- After all of the hoopla about India's flowering capitalist
economy - a nation of 890 million casting socialism aside the country's
economic-growth numbers for last year arrived with a seeming whimper: a
3.8% expansion. The forecast for this year? About 5% growth, not a lot
more than forecasts for the mature U.S. economy, and barely a third of
what China achieved last year.

There is a message in these figures for companies planning to do
business in India, and for individual investors hoping to cash in on
its burgeoning equity markets: All of those declarations about India's
being the next China, and about its vast market of middle-class
consumers hungry for Chevys and Cokes, could get you in trouble if you
don't keep them in perspective.

India is a place of tremendous promise; many companies hoping to be
global players will clearly want to find a niche here. But doing
business in India's commercial thicket, and investing in its markets,
requires a patient hand - and a view to the long, long term.

Without doubt, India has made great strides since introducing reforms
in 1991. It has slashed tariffs to a maximum of 65% from 400%. It has
made the rupee convertible for trade, welcomed foreign competition and
done away with onerous licensing. Exports were up 20% last year, and
foreign-investment inflows, including stock purchases, hit a record
$4.7 billion. In 1993, U.S. firms committed more money $1.1 billion,
than they did in the previous 47 years.

No wonder global-finance officials have widely praised India for a
smooth, albeit partial, transition from socialism. That 3.8% growth
rate looks pretty good after just three years- China, after all, has
been at it for 16, and has had lots of help from financiers in Hong
Kong and Taiwan.

Still, investors planning to plunge into India should remember that the
nation has all of the usual emerging market problems, such as
double-digit inflation and inadequate infrastructure, plus some:

-That middle-class market, variously estimated at as many as 250
million consumers, isn't quite that large when measured by Western
standards. Though purchasing power is different in India, if the Indian
middle-class is defined as those owning a refrigerator, it is only
about 30 million people; a television set, about 100 million to 125
million. A total of 200,000 cars were sold in the country last year.
Consumption is growing rapidly; the trick is to price a product
properly. This, after all, is a developing nation where 350 million
people are said to be "food insecure."

--The wild stock market lost half its capitalization in a
scandal-induced crash in 1992, and still hasn't fully recovered. The
antiquated Bombay Stock Exchange operates by open outcry, and can
function only two hours a day, producing four hours of paperwork for
each hour of trading. And what about insider trading? "We are babies in
the field of regulation," confesses one Indian securities regulator.

-Shifting political sands could hinder reform. Many government leaders
today were advocating socialism just a few years ago. While virtually
all politicians call the reform effort irreversible, the program could
stall if the leadership fails to win a majority in national elections
in 1996. And don't discount old socialist sentiments: "Just because
Karl Marx has been proven wrong," says one opposition leader, lecturing
some visiting U.S. investors, "doesn't mean that Milton Friedman has
been proven right." What's more, religious, ethnic and other political
passions flare easily. The destruction of a Muslim mosque by Hindu
nationalists in 1992, and bombings in Bombay in 1993, dealt the economy
a setback. Nationalism, whipped up by local politicians helped block a
Cargill Inc. unit from building a salt plant in Gujarat; one recent
survey found that roughly half of Indians still want foreign investment
restricted.

-Bureaucracy and rigid labor laws remain a drag on business. So too
corruption. One foreign oil-company executive here says he has even had
to pay off the phone repairman. "I complained to his company, but they
just laughed. The police said they'd arrest him--but only for a fee."
The legal system is clogged with cases, many dating from the 1970s. And
it is no surprise that budget revenue fell short last year: Only 1% of
the nation paid taxes.

--The pace of change may slow, because a next step involves truly
opening state-run sectors such as telecommunications (470,000 workers)
and banking (700,000) to foreign competition, which would probably mean
slashing payrolls. That is something the government, fearing social
instability, is loath to do.

So, if you are planning a move into the Indian market, do so with both
eyes open. The nation's ambitious economic-reform effort offers a great
deal of opportunity - for those investors prepared for the bumps along
the way.

--JOHN BUSSEY