Monday, July 18, 2011

A GDP Backed Stock Index

Countries with emerging markets, possessing a high GDP growth rate and expect to experience the same in foreseeable future, can introduce a stock directly linked to the GDP growth rate.
Countries like Brazil, India, China, Qatar, Paraguay can directly create a link between a certain percentage of GDP growth with the stock index value. This will make the said stock more predictable and a direct representation of the country's economy.

Reasoning behind this idea is, I was wondering if, instead of investing in Chinese markets or any other business opportunities there, I could invest in something that is directly linked with the growth of Chinese economy. Idea might seem strange and opposing to the current orthodox ways of setting different stock indices--having indirect links with phenomenon such as GDP, Inflation, Dollar Value--- But not directly linked stock. But as a country, the concern is to bring in investments, orthodox or un-orthodox is not the question to be asked.

This approach can be, specifically, used by countries like India, Brazil, Qatar, United Arab Emirates, whose GDP's are on the rise, and they are expecting growth in the foreseen future. There are so many investors who are inclined to invest in such countries but find it difficult to look for 'real' earning opportunities. These investors, including myself, would feel more secure in investing a country backed stock---Yes! a Country Backed Stock!! This way investors can get much secured returns on their investments, and can predict the returns in a better way than investing in any corporation of that country.

On the other hands these countries will have huge investments flowing in and this, in turn, again increase their GDPs if these investments are used properly.

Stocks may be linked with GDP itself, or GDP growth rate, but all technicalities once taken well care of, this NEW STOCK INDEX can generate greater returns for the good of both investors and the growing countries.