We are glad to announce that from this week we have struck a partnership with the Financial Times, which needs no introduction to an audience like you
We live in a world where capital can flow more or less seamlessly across borders. Events and policies in the developed economies have a huge impact on markets on the other side of the globe. Investors can no longer remain frogs in their own little domestic wells--- for making informed decisions, they need to get the best and most reputed news sources and the sharpest global analyses. Towards that end, we are glad to announce that from this week we have struck a partnership with the Financial Times, which needs no introduction to an audience like you.
For starters, we brought you a report on why the ESG (Environmental, Social and Governance) investing should benefit from a Biden win in the US elections. Incidentally, our US elections tracker suggest that Biden’s nose is ahead in the race. The other FT story was on China being caught between a rock and a hard place no matter who wins the US elections. The FT tie-up is part of our continuous effort to offer our readers more bang for the buck.
We too had a piece on China--on how the IMF views the Sino-US rivalry over the next few years, based on their forecasts for both these economies. Or are we exaggerating their differences, in view of the huge US appetite for the 6 billion dollar Chinese bond sale this week?
Tech stocks were the focus during the week, because of the corporate results. Infosys’s excellent results led to this little paean and to a look at some of the underlying trends fuelling its performance. Here’s our take on Wipro’s 5-point plan, its journey to catch up with its peers and what IBM’s belated search for focus means for Indian conglomerates. We also looked at Mindtree’s long-term prospects. We considered the improvement in the outlook for global IT sourcing as deal activity picks up. And to give you a broader perspective, we brought you two articles on tech from our partnership with the New York Times here and here.
The Indian government announced a rather convoluted stimulus programme, politely termed underwhelming by most analysts. Rating agency Moody’s was unimpressed, pointing out that ‘In total, the two rounds of stimulus bring the government’s direct spending on coronavirus-related fiscal support to around 1.2% of GDP. This compares with an average of around 2.5% of GDP for Baa-rated peers.’ We called it a band aid to heal a deep economic wound. Not much bang for the buck there, unfortunately, but perhaps the government has its reasons.
While the current situation may be dismal, hopes are soaring, as this RBI survey shows. Our interview with the CEO of Embassy Office Parks also showed signs of optimism in the office space market. Similar signs of good cheer were spotted among diagnostic firms. In the same vein, we believe the worst is behind this particular business, a sea of opportunity awaits in shipbuilding and a recovery is in sight for this firm.
Our recovery tracker was a sea of green, although its volatility should warn us about getting over-optimistic. India’s poor ranking on the misery index is another reason to temper the enthusiasm about a V-shaped recovery exhibited by the finance minister. The worry about inflation continues, especially now that global food prices are elevated. And the IMF says India will feel the effects of the pandemic more than other large economies.
The good news is that fresh COVID-19 cases in India have come down considerably recently. That’s in marked contrast to Europe, where Germany and Italy have reported record numbers of new cases, sending German bond yields to their lowest since March.
This week, the IMF’s Global Financial Stability Report was moved to say, “Amid huge uncertainties, a disconnect between financial markets and the evolution of the real economy has emerged, a vulnerability that could pose a threat to the recovery should investor appetite fade.” But who’s listening? A combination of abundant liquidity and stimulus hopes has kept the markets supported.
Howard Marks, legendary investor, summed it up succinctly in his latest memo: ‘So the lower the fed funds rate is, the lower bond yields will be, meaning outstanding bonds with higher interest rates will appreciate. And lower yields on bonds means they offer less competition to stocks, so stocks don’t have to be cheap to attract buying. They, too, will appreciate. And if high-quality assets become high-priced and thus offer low prospective returns, then low-quality assets will see buying – implying rising prices and falling prospective returns – because they look cheap relative to high-quality assets.’ The economy, though, is another matter altogether.