How Does India's Energy Consumption Compare to China's?

“Mark Mathew of Merrill Lynch has said that India will be amongst the least preferred markets in Asia if oil stays high. The food price and inflation concerns not as serious as crude,” according to MoneyControl, an Indian financial portal.

He did not specifically address China in that article.  Did he mean that India would fare worse than China or worse than most Asian countries?  We don’t know.  We hope to hear more from him on that question.

We would have thought that India would be somewhat less sensitive to spiraling energy costs than China, because India is less manufacturing intensive in its export business than China.

Here is a table of total energy consumption for oil, natural gas, coal and electricity in India and China. [Note that electricity consumption is duplicative of oil, gas and coal consumption, except for nuclear, hydro and other sources.]

If, in fact, either China (FXI) or India (INP) will suffer significantly more than the other due to energy costs, there may be an opportunity to short the most energy cost sensitive one against the least energy cost sensitive one. That question may possibly deserve further evaluation.

Of course, if you do such a trade effectively and oil backs down, the trade would then go against you.  Given oil price volatility, you would need wide tolerances for profit swings in the position.

Comments

[jcrash]

Who is this "we"?

[etfwanderer]

good article. fresh perspective. i always search this site for fresh research areas and for a long time didn't come across anything exciting. but some of the metrics you have used here are innovative.

[Richard Shaw]

jcrash -- we are firm of several advisors. we invite you to review our team in the "about" section of our website -- QVMgroup.com