Investing in Indian and Chinese ADRs and stocks

3 Jan 2008

Indian shares continue to promise good return due to the simple fact that the Indian economy is growing at 9% per annum and is expected to continue to grow at about 8% for at least 10 years to come. This provides a good opportunity to anyone who is willing to put his money in India.

However, Indian government does not allow foreign nationals to buy Indian stocks directly. They allow Non Resident Indians to buy the Indian Stocks listed in USA.

It is not enough to simply get the List of the Indian stocks listed in USA. An in depth analysis is a must to avoid any pitfall and to reduce risks of investing in an unknown territory. It will be helpful if you are familiar with the Indian geography and economics and you have a "feel" of India. In general this is not the case and you will have to base your analysis upon the P/E ( Price to Earning Ratio) and the forward P/E ration. You should Create a list of these stocks on a xl sheet and find out the P/E and the forward P/E of . A low P/E combined with even lower forward P/E is generally a good buy.

Chinese ADRs are larger in number. They also have similar high returns. However, they are also more risky as many of them are not very clean. You will have to do the same exercise of finding the list of Chinese ADRs and stocks listed in USA and then going through the P/E and forward P/E.