Moneycontrol Pro Panorama | Indian stocks sitting pretty, but Asia feels the China chill

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Representative image

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

You won’t know it if you see domestic stock indices and for most investors, that’s what matters. The Nifty is in the green as of noon, while there’s red elsewhere in major Asian markets. The root cause appears to be China, which is going through a state of unprecedented turmoil. Its citizens are protesting openly against the restrictions being imposed on them in the name of preventing the spread of COVID-19.

The country is seeing a situation in the pandemic most other large economies have already faced in recent years. COVID cases are rapidly rising in China, coinciding with opening up of mobility and economic activity. This could then lead to cases spreading further, followed by hospitalization or worse. Eventually, the disease peaks and then it’s a slow trudge back towards normalcy. Once the population attains a certain degree of immunity, then life appears to return to normal, at least for the economy.

But China’s zero-COVID policy has meant it has not seen the pandemic spread through its population. Vaccination coverage too has been less than desired. Now that it’s opening up, cases seem to be spreading and local authorities are clamping down again, but the people are in no mood for it. While the sight of workers in factories protesting at being locked up was one thing, seeing citizens coming out on streets to protest was stunning in a nation that’s ruled with an iron hand. In today’s edition, The Eastern Window looks into what has ignited these protests and how the government is attempting to placate the people and whether harsh measures will come. After all, if left unchecked people may soon begin to call for a systemic change that can become a threat to the leadership. Read to know more.

The state of China’s economy has been a worry, although its markets had turned attractive from a valuation perspective and had even seen foreign institutions turn buyers. But renewed lockdowns and protests have sent investors scurrying for cover. Asset classes from equities to commodities are facing the heat, as a China heading into a slowdown will mean lower demand landing in a world economy that is anyway seeing the West steer into the recession lane to bring inflation under control.

Data on commodities from Moneycontrol, based on MCX data, show price declines in crude oil, natural gas, silver, gold, non-ferrous metals and even cotton. While metals are an obvious victim of the selloff, crude oil too is under pressure and maybe for more reasons than just China. Europe’s cap on the price at which Russian oil can be bought will go into effect next week. The EU measure will also include stopping European companies from insuring vessels carrying Russian crude to other countries.

Today’s FT selection (free for Pro subscribers) does an in-depth analysis of the issues around the cap, what it means for the politics of oil and the impact of the cap on the market. Because: “For energy industry veterans, the coming days mark a moment of deep peril for the oil market — and a global economy that still depends heavily on the commodity.” Do read.

If all this is a tad unsettling, then to put you at ease, we also have a lunch with FT (also free to read) with the great investor Howard Marks, who “…thinks that, in investing, emotion is the enemy because it tends to make us buy at the highs and sell at the lows. And he tries to live by Buffett’s famous investing maxim: be fearful when others are greedy and greedy when others are fearful.” There’s many learnings and also some fun facts, such as how the legendary investor met his namesake, a notorious drug smuggler.

Investing insights from our research team

Dharmaj Crop Guard: Should you apply for this IPO?

AU SFB – A great long-term bet despite the stock’s lacklustre show

Does PB Fintech’s steep price correction make it a worthy bet?

VA Tech Wabag: Entering a new growth cycle

What else are we reading?

Why REITs are an optimal route to invest in real estate

India’s small insurers get the wings to grow as IRDA eases rules

Renewable energy push must ensure a just transition in power mix

China-Australia trade faceoff can open window for India

Migrants give FIFA World Cup a new meaning

Technical Picks: USD-INR, Infosys, Crude oil, HDFC AMC, L&T Finance Holdings and Marksans Pharma (These are published every trading day before markets open and can be read on the app)

Ravi AnanthanarayananMoneycontrol Pro