The Signal: The Week Highlights
1. COVID cries amplify as global economies shrink
Global powerhouses report catastrophic numbers as US economy suffers worst quarter since WWII as GDP, shrinking by 32.9%; UK hit by worst contraction in 41 years, shrinking by 2.2%. Germany sees deepest decline on record, shrinking by 10.1%.
The long-awaited outcome of the pandemic is here, and it’s created history! – For the wrong reasons. Like with a trampoline, economies have to press down first to jump higher. As worlds come to terms with “new normal”, green-shoots are being sowed by central banks today for a better tomorrow
2. India’s Magnetic Macros
India forex reserves climbed $1.27 Bn to record peak of $518 Bn! helping India’s CA turn a surplus after 12 years at $0.6 Bn! Falling imports, crude prices, and waning consumer demand has provided cushion to India, as global currencies like Dollar are on path to record their worst month in the last decade!
Amidst a corona- filled year, distraught with lockdowns and recessionary fears, India finds temporary comfort in its resilient macros. As economies open up, this trend may soon reverse, which is not necessarily a bad thing! Why? For it augurs an economy growing cause of higher demand, not one, growing cause of conservatism.
3. Steady SIPs for the steady investors
MF industry AUM garnered over ₹50,000 Cr in H1CY20, up 3% on Y-o-Y basis. Equity AUM rises 21% to Rs 7 lakh Cr, as SIPs remain resilient in Q1FY2, averaging ₹8,350 crore in the past 6 months. At folio count of 3.23 Cr SIPs, flows are expected to become stronger as economy picks up.
SIP continues to be the investment flavor fir the umpteenth time in a row! Touted as active investing for the passive investor, SIP propels disciplined cost-averaging investing, as markets continue to soar, recovering 45%+ from march lows.
4. “Go Gold Go” mantra continues to enchant investors
With COVID figures finally out, investors continue to find comfort in commodities. Gold & Silver continue to be investors’ choice of poison, recording newer all-time highs at 50K and 60K levels! Sentiments have followed suit outside domestic boundaries too, as the yellow metal hits a 9-year high, while the world’s currency – US Dollar, weakens!
As coronavirus headlines convert to numbers, investors sideline their investment growth prospects, to limit wealth erosion. This trend may not only continue, but also amplify, if the hype around vaccines fails to deliver.
5. Learn, Re-Learn, and then Learn some more!
After 34 years, India puts their education system under a knife, coming out with bold and forward-looking structure. Dissolving the divide between different streams, and re-organizing the HRD ministry as “Ministry of Education”, the new policy can be added to bouquet of products and services, attracting foreign eyes.
India gave birth to “Byju’s”, the largest e-learning platform in the world, valued at $10+ billion. And now, it is adopting global standards to do the same the offline platform as well (augmenting budget announcement). Education is the tree which branches economic prosperity. As India embarks on this journey of awarding meritocracy, so does it strengthen it’s position of being the manufacturer of more products and services in the global community