As world markets flip inward and politics begins rewriting financial guidelines, India’s development narrative might face stiffer resistance than anticipated. Valuation professional Aswath Damodaran warns that the worldwide surroundings India is entering into is way much less forgiving than the one China as soon as navigated.
“India will face far more hostility from the remainder of the world, because it tries to develop, than China did throughout the previous few a long time,” he writes in his newest weblog publish, Investing Politics: Globalization Backlash and Authorities Disruption.
Whereas China has turn out to be massive sufficient to maintain development by its home market, Damodaran means that India’s aspirations are unfolding at a time when globalization is not ascendant. “Globalization… has now, in my opinion, crested and is going through pushback,” he writes.
He traces the shift to the 2008 monetary disaster, which he says shattered public belief in world establishments and expert-led techniques. That erosion, he argues, paved the best way for political upheavals—Brexit, the rise of nationalist events in Europe, and Donald Trump’s presidency.
In Trump’s second act, Damodaran sees a extra unrestrained strategy. “He has wielded tariffs as a weapon and is open about his contempt for world organizations,” he observes. Whereas economists fear about long-term harm, Damodaran says a big a part of the general public is “cheering Trump on.”
Damodaran, identified for his valuation insights, additionally breaks down who gained and who misplaced from the globalization period. Among the many winners: China, which now accounts for practically 38% of world GDP development (2010–2023); customers, with extra selections at decrease prices; and monetary markets, which turned central to public coverage. Additionally within the winner’s circle: world establishments, multinational companies, and consultants who formed discourse in boards like Davos.
However there have been clear losers. Japan and Europe misplaced financial floor. Small companies and blue-collar employees in developed economies bore the brunt of competitors and offshoring. “Manufacturing jobs peaked at shut to twenty million in 1979 and dropped to about 13 million in 2024,” he writes of the U.S. expertise. He additionally cites a broader democratic erosion, the place voters, even when choosing change, noticed coverage dictated by “a worldwide script.”
For Damodaran, these shifts will not be summary—they straight affect firm valuation. “To worth firms right now, I’ve no selection however to usher in the economics and politics of the world that these firms inhabit,” he writes.
One firm below that lens is Tesla. In 2024, he valued the inventory at $182 and purchased in at $170. However the final 12 months modified the narrative. Tesla now faces an actual rival in China’s BYD, hybrids are making a comeback, and CEO Elon Musk’s polarizing politics are impacting notion. “My estimate of worth for Tesla stands at about $150 a share, about $30 lower than my worth final 12 months, and about $70 under its inventory worth,” he notes.
