India Pakistan Comparison 2010

[Hutchroy]

Are you saying all Indian stock values are equal to India's GDP? Fascinating. Do you have a link?

With the market cap about the same as India's GDP, Indian stocks are overvalued, and a bubble waiting to burst.

OTOH, KSE shares have a lot of room to grow. The KSE market cap is a fraction of Pak GDP, and its shares trade at half of the PE ratios in Mumbai.

BSE Market Cap 28-04-2010 : INR 6,207,920.08 Crores = INR 62,079.2008 Billion

Today's Exchange Rate USD 1 = INR 44.60

Thus BSE Market Cap. Equates to = USD 1,391.91 Billion I.E. USD 1.39191 Trillion

Pakistan is indeed Richer than India as in 1993 Pakistan’s GDP Per Capita was nearly Twice that of India!

 

[prodevelopment]

BSE Market Cap 28-04-2010 : INR 6,207,920.08 Crores = INR 62,079.2008 Billion

Today's Exchange Rate USD 1 = INR 44.60

Thus BSE Market Cap. Equates to = USD 1,391.91 Billion I.E. USD 1.39191 Trillion

Pakistan is indeed Richer than India as in 1993 Pakistan’s GDP Per Capita was nearly Twice that of India!

Errr, why are you only considering BSE? NSE's market cap is equal to BSE.

Never mind that. HOW are you guys comparing combined Market Cap of capital markets to GDP? On what basis/grounds? How are the two even related? Seems like comparing Apples and Oranges to me.....

1993!!!! which year are you living in? Which decade? Which Century? Which Millennium?

Here's your current GDP per capita figures:
List of countries by GDP (PPP) per capita - Wikipedia, the free encyclopedia

Both India and Pakistan have almost EXACTLY same figures. That means, that we are in equally deep ****

 

[truefriend]

india is batter
lol

Soo may say soo baimaan , phir bi baharat mahan

lolzzzzzzzzzzzzzz

ur mr. 10% give u answer for tht
pakistan is tche ountry hows leader have to leave the country after they are no more president or prime minister ....
just go and check the histry book man

 

[gregarious]

Hi,

This is my first post in the forum. I was a silent reader until I read this post and wanted to share my views.

With the market cap about the same as India's GDP, Indian stocks are overvalued, and a bubble waiting to burst.

OTOH, KSE shares have a lot of room to grow. The KSE market cap is a fraction of Pak GDP, and its shares trade at half of the PE ratios in Mumbai.

How is market cap & GDP linked? GDP is the value of finished goods in an economy, whereas market cap of an exchange is value of all complanies listed on that exchange. Remember, no company is 100% public and not all companies in a country are listed on exchange. If all companies were to be 100% public, then the market cap would outnumber GDP by huge margin.
This is true with every economy, not just India. We cannot link market cap & GDP.
Also, there was a huge correction in the Indian stock market during the last recession. The stocks are not overpriced now.

Regarding low PE, I agree that low PE stocks are attractive buys, however, its difficult to find good stocks with low PE in India. There are FIIs & Institutional iverstors ready to spot such opportunities and take the prices up.
I am not aware of the trading volumes and foreing investments in KSE. These factors will not spare a low PE stock with sound fundamentals to remain as a cheap buy.
I know that KSE used to be amongst the fastest growing indices few years back. Have not been following it closely of late.

Apologies, if this was off topic.
Regards

 

[RiazHaq]

Hi,

This is my first post in the forum. I was a silent reader until I read this post and wanted to share my views.




How is market cap & GDP linked? GDP is the value of finished goods in an economy, whereas market cap of an exchange is value of all complanies listed on that exchange. Remember, no company is 100% public and not all companies in a country are listed on exchange. If all companies were to be 100% public, then the market cap would outnumber GDP by huge margin.
This is true with every economy, not just India. We cannot link market cap & GDP.
Also, there was a huge correction in the Indian stock market during the last recession. The stocks are not overpriced now.

Regarding low PE, I agree that low PE stocks are attractive buys, however, its difficult to find good stocks with low PE in India. There are FIIs & Institutional iverstors ready to spot such opportunities and take the prices up.
I am not aware of the trading volumes and foreing investments in KSE. These factors will not spare a low PE stock with sound fundamentals to remain as a cheap buy.
I know that KSE used to be amongst the fastest growing indices few years back. Have not been following it closely of late.

Apologies, if this was off topic.
Regards

There is a long history of connection between Market Caps and GDPs..and the lesson it offers is that peaks when market cap exceeds national gdp are followed by market crashes.

Take a look at this: http://www.google.com/publicdata?ds...m_mkt_lcap_gd_zs&idim=country:USA:CHN:IND:PAK

 

[RiazHaq]

There is a long history of connection between Market Caps and GDPs..and the lesson it offers is that peaks when market cap exceeds national gdp are followed by market crashes.

Take a look at this: Google - public data

What Does Stock Market Capitalization To GDP Ratio Mean?
A ratio used to determine whether an overall market is undervalued or overvalued. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the world market depending on what values are used in the calculation.

Calculated as:

Stock Market Capitalization To GDP Ratio
Investopedia Says
Investopedia explains Stock Market Capitalization To GDP Ratio
The result of this calculation is the percentage of GDP that represents stock market value. Typically, a result of greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated.

In 2000, according to statistics at the World Bank the market cap to GDP ratio for the U.S. was 153%, a sign of an overvalued market. With the U.S. market falling sharply after the dotcom bubble burst, this ratio may have some predictive value in signaling peaks in the market. However, in 2003, the ratio was around 130%, which was still overvalued but the market went on to produce all-time highs over the next few years.

Stock Market Capitalization To GDP Ratio

 

[ramu]

With the market cap about the same as India's GDP, Indian stocks are overvalued, and a bubble waiting to burst.

OTOH, KSE shares have a lot of room to grow. The KSE market cap is a fraction of Pak GDP, and its shares trade at half of the PE ratios in Mumbai.

We had the same discussion and I asked you to compare the book value of the stocks and you backed out.

Riaz, I am ready to admit areas where India can do better. Why don't you remove your green tinted glasses and see the reality.

overvalued or undervalued is immaterial when considering book value of the company as it is not influenced by market pressures.

 

[ramu]

What Does Stock Market Capitalization To GDP Ratio Mean?
A ratio used to determine whether an overall market is undervalued or overvalued. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the world market depending on what values are used in the calculation.

Calculated as:

Stock Market Capitalization To GDP Ratio
Investopedia Says
Investopedia explains Stock Market Capitalization To GDP Ratio
The result of this calculation is the percentage of GDP that represents stock market value. Typically, a result of greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated.

In 2000, according to statistics at the World Bank the market cap to GDP ratio for the U.S. was 153%, a sign of an overvalued market. With the U.S. market falling sharply after the dotcom bubble burst, this ratio may have some predictive value in signaling peaks in the market. However, in 2003, the ratio was around 130%, which was still overvalued but the market went on to produce all-time highs over the next few years.

Stock Market Capitalization To GDP Ratio

Haq, Hiding behind definitions ?

From your link:

Investopedia explains Stock Market Capitalization To GDP Ratio
The result of this calculation is the percentage of GDP that represents stock market value. Typically, a result of greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated.

In 2000, according to statistics at the World Bank the market cap to GDP ratio for the U.S. was 153%, a sign of an overvalued market. With the U.S. market falling sharply after the dotcom bubble burst, this ratio may have some predictive value in signaling peaks in the market. However, in 2003, the ratio was around 130%, which was still overvalued but the market went on to produce all-time highs over the next few years.

It is more than evident that this ratio is not gospel to derive if a market is overvalued or undervalued.

 

[ramu]

Hi,

This is my first post in the forum. I was a silent reader until I read this post and wanted to share my views.

Welcome ....

 

[RiazHaq]

We had the same discussion and I asked you to compare the book value of the stocks and you backed out.

Riaz, I am ready to admit areas where India can do better. Why don't you remove your green tinted glasses and see the reality.

overvalued or undervalued is immaterial when considering book value of the company as it is not influenced by market pressures.

Book values are based on accounting gimmicks in today's world, with all sorts of off-balance sheet debt and transactions to hide the real picture.

And India is not immune from it, as we learned in Satyam case. Family owned and run businesses in India are particularly notorious cheaters.

 

[ramu]

Book values are based on accounting gimmicks in today's world, with all sorts of off-balance sheet debt and transactions to hide the real picture.

And India is not immune from it, as we learned in Satyam case. Family owned and run businesses in India are particularly notorious cheaters.

Riaz, so you believe the book value quoted by India is a gimmick then why are you using India's GDP figures !!!!! The GDP is derived from the same accounts that you call gimmicks. I know it is not in you to accept anything. But this is going too far. When you gave a great big talk on Market cap : GDP ratio, where was your understanding of all these gimmicks ?

Satyam case : Now there you go. So why not quote Enron and classify US accounting practices as gimmicks too ? Why not classify every country's (ofcourse except Pakistan) accounting practices as shady? We will have no basis for economics and this forum can be void of all discussions related to GDP as it turns out to be gimmicks!


It is unfortunate to see that you have stooped so low just to defend your point of view. You can even now gracefully admit things that are black and white atleast in this case. If you fail to duck here, your credibility in my eyes atleast is dented for ever.

 

[RiazHaq]

Haq, Hiding behind definitions ?

From your link:



It is more than evident that this ratio is not gospel to derive if a market is overvalued or undervalued.

IN every case, lofty valuations exceeding GDP are not sustainable as we saw in the last decade even in America where MNCs dominate the markets.

India runs large trade deficits. On paper, the US does too, but the US case is very special. US trade deficit is highly exaggerated a the US GDP is significantly underestimated.

The U.S. trade deficit figure for 2008 was $695 Billion (Exports minus Imports, $1.8 Trillion minus $2.5 Trillion). However 34% of the imports were from U.S. multinationals abroad (some put this figure at 39%). When these multinationals send their product to the US it gets counted as "import". ...Adjusting the $2.5 trillion for such "imports" reduces the import figure to a little over $1.5 Trillion, converting the actual trade deficit into a TRADE SURPLUS!!.

The trade deficit goes into calculating the GDP, which as it stands with the official figures places the U.S. at the top with a GDP of $ 14.8 Trillion. U.S. occupied Japan is second with a GDP of $ 5 trillion. The largest economy in Europe is Germany (also US occupied) with a $3.4 Trillion GDP. Adjusting for this fictitious trade deficit, US GDP gets bumped up by almost another trillion dollars.

 

[RiazHaq]

Riaz, so you believe the book value quoted by India is a gimmick then why are you using India's GDP figures !!!!! The GDP is derived from the same accounts that you call gimmicks. I know it is not in you to accept anything. But this is going too far. When you gave a great big talk on Market cap : GDP ratio, where was your understanding of all these gimmicks ?

Satyam case : Now there you go. So why not quote Enron and classify US accounting practices as gimmicks too ? Why not classify every country's (ofcourse except Pakistan) accounting practices as shady? We will have no basis for economics and this forum can be void of all discussions related to GDP as it turns out to be gimmicks!


It is unfortunate to see that you have stooped so low just to defend your point of view. You can even now gracefully admit things that are black and white atleast in this case. If you fail to duck here, your credibility in my eyes atleast is dented for ever.

Only about 20% of Indian GDP comes from the industrial sector that dominates Indian markets. The rest comes from agriculture and service sector. Even if the Indian public companies book values are garbage, it has a small impact on Indian GDP calcs.

 

[Hutchroy]

What Does Stock Market Capitalization To GDP Ratio Mean?
A ratio used to determine whether an overall market is undervalued or overvalued. The ratio can be used to focus on specific markets, such as the U.S. market, or it can be applied to the world market depending on what values are used in the calculation.

Calculated as:

Stock Market Capitalization To GDP Ratio
Investopedia Says
Investopedia explains Stock Market Capitalization To GDP Ratio
The result of this calculation is the percentage of GDP that represents stock market value. Typically, a result of greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. In recent years, however, determining what percentage level is accurate in showing undervaluation and overvaluation has been hotly debated.

In 2000, according to statistics at the World Bank the market cap to GDP ratio for the U.S. was 153%, a sign of an overvalued market. With the U.S. market falling sharply after the dotcom bubble burst, this ratio may have some predictive value in signaling peaks in the market. However, in 2003, the ratio was around 130%, which was still overvalued but the market went on to produce all-time highs over the next few years.

Stock Market Capitalization To GDP Ratio

My reply to you on this Page #197 timed Today, 02:46 PM mentioning the Market Capitalization Figure pertains only to the Bombay (Mumbai) Stock Exchange. To find the Total Market Capitalization of Indian Companies on various Indian Stock Exchanges you will have to have a sum of the Market Capitalization of all Indian Companies registered by over Twenty Five Indian Stock Exchanges and I am sure that the “Total Sum” will then reflect the Real Values of Indian Companies.

I would recommend Milk of Magnesia for Heartburn.

 

[ramu]

Only about 20% of Indian GDP comes from the industrial sector that dominates Indian markets. The rest comes from agriculture and service sector. Even if the Indian public companies book values are garbage, it has a small impact on Indian GDP calcs.

So is IT industry that comes under services not in your gimmick list ? BTW, Satyam is a service sector based company !


You are wrong again, the Agriculture contributes to about 20% and the "other" sectors that you consider as shady account for the other 80.