India’s $1.8 Trillion Gold Mine

As longtime readers know, we love small caps here at Wall Street Daily — with good reason.

During periods of economic expansion, small stocks often outperform blue chips by a wide margin.

In fact, on swelling hopes of prosperity under President Trump, the market’s smallest stocks have gained 14% since the election — compared with a 9% gain of the S&P500.

However, things have been easier said than done in the White House. As a result, the stock rally has been put on hold for the time being — at least here in the United States.

But as senior analyst Jonathan Rodriguez explains below, now is the perfect time to load up on small caps abroad…

Ahead of the tape,

Louis Basenese
Chief Investment Strategist

A $1.8 Trillion Market Awaits

After years of underperformance thanks to a strong U.S. dollar, emerging markets have roared back to life.

Since bottoming out in early 2016, the MSCI Emerging Markets index has gained 39%, versus a 28% rise in U.S. equities.

Buoyed by rising commodities prices as well as inflation, emerging markets have a whole lot of room to grow, too.

And one country stands above the rest…

I’m talking about India, one of the fastest-growing emerging markets in the world.

Fueled by increased public spending and big gains in the country’s mining industry, India’s GDP has grown by more than 7% year over year in the last four quarters.

That’s nearly nine times higher than U.S. GDP, which averaged just 1.7% annually over the same period.

Of course, the effects of demonetization — or the removal of physical cash from circulation — could result in a downward revision of up to 1%.

But growth remains much stronger in India than here in the States — and Indian stocks have soared over U.S. stocks as a result.

The total Indian equities market is now worth $1.8 trillion.

Granted, the postelection “Trump” rally has favored domestic small caps. But a weakening dollar and fading prospects of sweeping economic changes have investors hitting the “pause” button on the upswing.