The assignment mainly puts light on the identification of two different natures of emerging markets which can be utilised by the Australian investors as an investment opportunity that is more or less enough. The suitable factors are needed for the stability of the nation. This is in turn responsible for making the investors make suitable decisions regarding their necessary investment. In the assignment the important factors were the valuation of the financial as well as the political history. The emerging markets that have been chosen for the assignment are those of India and Malaysia. These have been chosen because it is considered that they are the providers of the highest return emerging markets all over the World. The suitable assets of the two emerging markets are also evaluated in the given project for identification of any sort of links that assist in meeting the requirements of the investment. It also helps in the increase of the required returns of the said investment. Finally it can be said that an adequate advantage as well as a disadvantage for the establishment of a country is shown in the study. This also helps in the identification of the prospects for the Australian investors. Suitable amount of recommendations help the investors in the identification of the investment opportunities in the emerging markets and can ultimately adjust their portfolios.
1.Outline of the political and financial histories of the two chosen emerging countries:
In case of India, more than 50% of the Indian Economy is influenced by the agriculture of the country. This is due to the fact that this is basically the major source of income for a large percentage of the population. The present economic growth of India, can be identified taking the help of the rise of the GDP which is clearly shown in the figure 1. The concerned GDP of India, relatively increased from the year 2008 to the year 2016, directly indicating a particular nature of increase in the purchasing power of the citizens (Buckley 2017).
Mainly, India utilizes the Government for ruling the overall people of India, where the BJP are in position of control. The Prime Minister and his method of thought assists the investment of the investors because of his capability to think industrially. The present scenario in India, where most of the Indians are focussed on the development of the country as well as getting more and more opportunities for the purpose of investment.
At present the GDP of Malaysia majorly depicts a rising trend which is the most important factor for the investment opportunities for the investors in the country. The rise of the GDP majorly indicates that the financial condition of the country is stable and can provide more amount of returns from the investments in case the FDIs are conducted in adequate number. Malaysia is considered to be one of the emerging countries of the world that allows the International Trades. This directly assists the generation of the required level of the profitability for the investors. In addition to this Malaysia also allows the distinct industries which directly help in the improvement of the industrial growth (Bodie 2013).
The scenario of Malaysia at present with reference to the political nature is more or less stable because the government is ruled by a multinational democratic country. Apart from this the party that has been in power for more than 25 years is the Barisan National party, thereby increasing the overall political stability. This stability in the political scenario can eventually help in the foreign investors to get better returns from the required investments (Anzbusiness.com. 2017).
2. Stability of every nation as well as their fiscal performance with reference to the real growth of the GDP, interest rates, exchanges rates as well as those of employment and un-employment:
From the figure 3, a careful study shows that the relevant GDP, interest rates as well as the interest rates of Malaysia could be found clearly. In addition to this, the Malaysian GDP has been rising adequately and reached to 296.359 Billion USD as of 2016. This sort of rise in the GDP indicates that the industries in the country get more and more income from their investments. Thus the financial stability of the economy is viable and is possible to be utilised by the foreign investors in order to better the economy further to increase the return for the investment. The stability of the interest rates helps in boosting the industrial stability of the country. The exchange rates of Malaysia against that of Australia have risen relatively (Agility.com. 2017). This shows that more number of Malaysian Ringgits could be generated with one Australian dollar. Thus it can be stated that the present stability of Malaysia is relatively viable.
After proper evaluation of the figure 4, the GDP, interest rate as well as the exchange rate of India are evaluated relatively for the investment purposes. The relevant amount of the interest rates are identified at the level of 6% that directly accommodates the rise of the exchange rate and which is used against other countries (Francis et al. 2013). The currency exchange rate of India with comparison to Australia has been decreasing since 2015. Further, the GDP of India has grown to 2.264 Trillion which states directly that the growth of the Business in India is increasing relatively overtime. Thus overall the factors help to show that the investments in India would ultimately help in the generation of the relevant income for an Australian Investor (Bhaumik, Driffield and Zhou 2016).
3. Identification of the key industries and detection of the current account:
Numerous industries exist in India, including the Pharmaceuticals, Banks, Automobiles, as well as real estate. These are considered to be the driving force of the economy. Thus the overall investment in all the factors could eventually help the investors to generate the returns from the overall investments. In addition to this, the sectors could also help in the reduction of the risk form the investment (Jakovljevic 2014). This is possible because the identification of the relative risk is possible from the volume. Thus in case of India, the investments in the different sectors namely real estate, banks, pharmaceuticals, automobiles are most preferred. In India, majority of the banks are government linked thus directly helping in the securing of the investment fund investor (Buckley 2017).
The present account is mainly at a deficiency as it records at 0.65 or an amount of $3.4 Billion in Q4, 2017. The significant increase in the current account deficit was due to the increasing import conductor in India. It could however be said that the current market scene prospects could help in the improvement of the generation of the relative income for the investors (Koepke 2015).
The present account surplus is mainly at 2.1% in 2016. This basically indicates that the positive scenario for the investor because the country possesses a certain amount of surplus in the present account. This could eventually assist in the increase of the returns of the foreign investors in the Malaysian economy (Nseindia.com. 2017).
Electronic, petroleum, liquefied natural gas, wood palm oil and rubber are the major industries in the Malaysian economy. These industries are the major economic players in the Malaysian economy. This is also responsible for the direct strengthening of resolve of the investors (Sauvant 2017). The present education as well as the biotechnology industries is also an emerging sector that can increase the chances of the investors to gain higher return from the investment in future. Thus it can be concluded that the investment in Malaysia could eventually help the Australian investment for the generation of the revenue. This are conducted in the sectors namely Electronic, Petroleum, Liquefied natural gas, wood palm oil and rubber.
4. Evaluation of the recent performance of cash, fixed interest and equities:
The concerned fixed rate of interest in Malaysia is effectively at the rate of 3.10%, that would assist the investors as well as obtained the higher amount of returns from the riskless investment. The above table also identifies the relevant index of the Malaysian market that is relatively in the stage of consolidation. However, present market analysis majorly states that the trend is of an upward nature in case of the Malaysian market which assists the investors in obtaining higher and better returns from the investments. The evaluation of the total market trends would ultimately assist in the generation of higher returns. The total petroleum market is declining that can reflect the portfolio in a negative way. Thus the Australian investor can avoid the investments in the petroleum companies (Tradingeconomics.com. 2017).
Fixed interest rate
Table 1: depicting the market index and fixed interest rate of India
(Source: Nseindia.com 2017)
At present the Indian economy provides a significant growth on the higher side than majority of the emerging economies that directly increases the relevant profits of the investors. As obtained from the Nifty 50, the identification of the relevant growth of the Indian stock market is possible. This eventually allowed the Australian investors to generate higher amount of revenues from the investments. The present fixed interest rate that is given by the Indian banks 6.75%, which could eventually allow investors to gain risk less return.
Thus, the evaluation of the equity market relevant returns provided in the Indian market is identified as the most viable. This is because the Malaysian Market is indentified to be consolidating.
5. Depiction of the advantages and disadvantages of the establishment of a country fund of the investments for the Australian Investors:
The relevant advantages as well as the disadvantages could be identified as establishment of the country’s investors in Australia for India. The most significant advantages for the fund of the country is usually identified as the major opportunities in the fields of automobile, banking, pharmaceuticals as well as the real estate industry are provided by India. The investments might be reduced due to the rising gap in the currency exchange also.
The advantages in the Malaysian economy are comparatively higher as their industries provided higher forms of revenue. Besides the current account in Malaysia has a surplus which ultimately helps in the boosting of the purchasing power of an individual. This can possibly help the economy and fiscal growth is also boosted. The disadvantage of investing in the Australian market however can be identified from the Petroleum industry, which helps derive the Malaysian market due to the present decline in the oil prices. This puts pressure on the growth of investment of the Australian investors.
6. Providing required recommendations for the portfolio managers:
It is necessary to invest in both India as well as Malaysia due to both possessing the required prospects based on the evaluation of returns as well as the industrial growth. There is an overall positivity in the evaluation and study of the economic policies in India as it would assist India in the generation of the suitable returns.
The evaluation of the Malaysian market also shows that there are relevant growth prospects there as well. As a result of comparatively less amount of fluctuations in the investment, a systematic investment plan is needed to be incorporated to assist the investors in Australia generate returns from the emerging markets.
It can be said that this particular assignment helps in the attainment of the investment objective required to be identified by the investors in those countries which are financially emerging.
The interest rates, evaluation of the GDP, equities and many other aspects need to be evaluated for the proper assessment of the overall financial stability of the country. This could eventually help in identifying relevant investment opportunities that could generate high returns from investment. Thus the evaluation helps to reach a conclusion that investments in both India as well as Malaysia is a good opportunity for the Australian Investors.
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