Get Ready for a Boom

Hello, friends. This is Vijay Bhambwani here. I hope my videos are helping you decipher the markets a little better helping you understand the nuances of the markets and at the same time, keeping the big picture in mind and keeping a backdrop of what's happening in the big picture with your day to day trades.

Friends, of late, I have made, I've recorded some videos, which really look at the macro canvas of things over a multi-year time frame. I've even started talking about decades. For example, a fortnight ago I made a video on how the next decade belongs to the equity bulls.

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I made another video as to how, starting from 2022, India will see a huge amount of inflows from the overseas bond markets from the pension funds and the long-term fixed income investors, which could basically be as much as 25 to 30 billion dollars in the first year itself and going all the way up to 150 to 200 billion dollars over the next one decade.

Now, as long as you know that this kind of money is waiting in the pipeline to come into India, it doesn't take you rocket science to tell you where the Indian forex reserves are concerned, where the Indian currency peg versus the dollar is concerned, what the overall sentiments for the Indian equity markets is going to be like, and since all this money coming in, it will also help the government tide over its cash flow requirements as to what social welfare infrastructure and other jobs that India needs so badly will result in.

Now before I proceed in this video, let me assure you, I am not making a political statement. I am completely agnostic. I am looking at things from the lens of a financial market watcher, and what appears to me in the news media in terms of hard numbers is what I am going by. So let's not get anything else into the picture but let's stick to facts.

Now, last week, I was very happy to read that the Indian government is beginning the process of signing a comprehensive economic partnership agreement, CEPA with the United Arab Emirates and Dr. Thani Ahmed Al Zeyoudi, the minister of state for foreign trade, was in India. He had a couple of rounds of meetings with the Indian authorities and they are basically hopeful of the negotiations going on till December of 2021 and they fought to complete all the nitty gritty of these negotiations by December 21 put pen on paper and have written agreement signed hopefully by March 2021.

Now how big is the trade between India and the UAE? India is the second largest trade partner for the United Arab Emirates, and India is 9% of all total foreign trade of the United Arab Emirates. Now what really enthuses me is that before the covid pandemic hit us, the trade size between India and UAE was US$40 bn.

Now India and the UAE both are hopeful that within five years of signing the CEPA which is a comprehensive economic partnership agreement, this trade size will jump straight away US$100 bn in less than a decade, and this is goods. US$15 bn or higher will be services. Now that is the kind of jump that we are talking about. Remember, we are 40 billion now. You're looking at 115 billion in five years. That's almost 300%. Now that is something that the markets cannot, they just will not ignore.

Now, how important is the UAE to India? Very simply put in hard numbers, it is the ninth largest investor in India, with US$18 bn in funds committed. We have 35 lakh Indians, 3.5 million Indians who work in the UAE and 4,000 Indian companies have offices in the United Arab Emirates. Dubai Expo 2020 is starting on first of October 2021.

Now, before you tell me that I am making a phonetic mistake, the 2020 Expo was delayed due to covid. It is now being held there from 1st October onwards, it will be on till the end of March and 50 big ticket Indian corporates, marquee names, headline names, have booked their presence in the India Pavilion of the Dubai Expo 2020.

There will be there till March 2022, garnering business, negotiating with overseas investors, with foreign clients, signing contracts, bringing dollars into this country, and that is not counted among the money that the UAE itself will be bringing in as a government to government deal. So you see, the trickle-down effect is a multiple of what is happening here. The list of companies that are booking their own presence in the pavilion is growing till the last minute.

Now pre-covid, before covid hit us, 18% of all dollar inflows coming into the country was from the Middle East. Now, this is including goods and services or merchandise exports, service exports, and NRI salaries that are hardworking Indian brothers and sisters were contributing by way of dollar remittances, which they were sending home. I expect this figure to go up not just from NRI salaries, but like I said, merchant exports.

Do remember that the trade size is going to go up from US$40 bn to US$115 bn. How important is the trade with the for India? And for you and me as stock market investors?

Very simply put, the Middle East sovereign investment funds and almost every country has a huge and I'm talking of huge sovereign investment funds, and they invariably tend to invest in equity markets of other countries. If you were to go to SEBI's website or NSE's website and see the number of companies who shares are being held by the Qatar Sovereign Investment Fund, by the UAE fund, etc, you will see that they are investing thousands of crores in Indian stock market.

The honourable Prime Minister's pet project, the Bharat Mala Project, which is the borders of our country being linked by a road and national road. In the previous NDA government led by the late Prime Minister Atal Bihari Vajpayee, we had the golden quadrilateral where the country was linked with the road like a plus sign running through the centre. Now the Bharat Mala, Mala is like a garland, the road being made along the circumference of the country.

Middle East countries, starting from Qatar, have invested a lot of money in the Indian infrastructure projects. We have an agreement signed with them both in terms of internal and external security, cyber security, and the more you have trade with countries, the better friends you are with them and therefore, you're going to have the long arm of the law reaching out into their countries to even nab criminals who are escaping the long from India right now.

Net-net, I am extremely excited. You can call me I am overly excited. Whatever it is, you're entitled to your opinion. Just as I'm entitled to mine. I can see US$115 bn coming in. Yes, it's a long time. It's five years from now, but it will build up from first of October 2021 when the Dubai Expo opens and 50 headline, marquee names of Indian corporates will start shaking hands with foreign investors and money and business will start to flow in.

On this very optimistic note, my friends, I bid goodbye to you in this video not before reminding you to click like on this video if you liked what you saw. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive instant alerts about fresh videos being put up out here. Good, bad or ugly, I'd love to hear from you in the comments section and help me reach out to fellow like-minded investors by recommending this video to your family and friends.

Friends, I thank you for your patience and watching this video. I wish you have a very profitable week ahead. Till we meet again in my next video, this is Vijay Bhambwani signing off for now. Do take care Bye.