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Emerging Market Funds Try to Sidestep China

Article by Reshma Kapadia of Barrons.com

China is the 800-pound panda in any conversation about what is going on in the world today. The nation dominates the headlines, is the most-cited reason for sleeplessness among corporate executives, and puzzles investors daily. China looms particularly large for investors in the emerging markets: It represents an uncomfortably outsize stake in most portfolios. And fund managers are getting nervous.

The challenges are daunting. China is growing at its slowest pace in decades — a slowdown that began before the trade war. In past downturns, Beijing printed massive amounts of money to stimulate the economy, but that has resulted in high government debt that prevents it from taking similar measures now. China has also been bracing for a protracted struggle in the conflict with the U.S. over not just trade, but also technology and geopolitical leadership. To complicate the situation, mass pro-democracy protests in Hong Kong that began in June are still going strong, presenting the biggest threat to Beijing’s power in decades.

Not surprisingly, stock investors are reassessing their China stakes and have pulled $13 billion out of equities this year, according to EPFR Global. Meanwhile, the MSCI Emerging Markets index is increasingly a China play: Nearly a third of its weighting is in China, up from 19% just five years ago. Continue reading Emerging Market Funds Try to Sidestep China →

Banking, Financial Stocks, Indian Stock Market, Stock Market News

Asia Market Update – 07Feb2020

The market pared losses in early afternoon trade. The S&P BSE Sensex was down 167.88 points at 40,973.97. The Nifty 50 index was down 64.65 points at 12,033.70. The market breadth was ruled by sellers. On the BSE, 916 shares rose and 1305 shares fell. In Nifty 50 index, 12 stocks advanced while 38 stocks declined. Cipla rose 0.52%. Dr Reddy’s shed 0.61%. HAL was up 0.45%. Lakshmi Vilas Bank hit the 10% upper circuit at Rs 18.15. Maruti Suzuki India declined 0.9%. Ashoka Buildcon declined 1.01% to Rs 112.65.

China’s central bank will provide the first batch of special re-lending funds for combating the coronavirus on Monday and will offer the facility weekly to banks later this month. The move comes as the virus outbreak continues to hammer retail spending and industrial production and as economists continue to downgrade their growth forecasts as a result. The growth shock has prompted the Peoples Bank of China (PBOC) to prioritize growth over debt control by pledging a series of emergency measures to inject cash into the financial system and wider economy. Under the funding facility, 9 major national banks and some local banks in 10 provinces and cities are qualified for the special funding, according to PBOC Deputy Governor Liu Guoqiang. Those financial institutions should speed up the review process for loan applications and release loans within 2 days, Mr Liu said in a speech posted on the PBOC website. The central bank had earlier said it would ensure funds are directed to production and business activities related to combating the coronavirus. Financial institutions must offer loans from special re-lending funds at up to 100 basis points below the one-year Loan Prime Rate, it said. The depth of the downturn will depend on how quickly the virus is contained and by extension how quickly restrictions on travel and factory production will be lifted.

Automotives, Banking, Biotech Stocks, Energy Stocks, Financial Stocks, Indian Stock Market, Pharma Stocks, Stock Market News, Technology Stocks

Indian Equity Market Update – 04Feb2020

Mumbai, 04 Feb 2020. Key equity benchmarks on NSE and BSE ended with robust gains today, supported by steep slide in crude oil prices and positive global shares – after the sharp sell off on Budget Day on Saturday, 01 Feb 2020.

Nifty50 index gained 271 points to 11,979.
BSE Sensex gained 917 points to 40,789.

Market breadth was tilted towards buyers. On the BSE, 1564 shares rose and 856 shares fell. In Nifty 50 index, 45 stocks advanced while 5 stocks declined. Fitch Ratings on Monday said India is expected to clock a GDP growth of 5.6% in the next financial year, as Budget 2020 has not “materially altered” its view on the country’s growth outlook.

The Economic Survey of India released by the government last week projected India’s growth rate at 6-6.5% for FY21. NMDC (up 6.16%), Jindal Steel & Power (up 5.35%), Hindustan Copper (up 4.61%), Hindalco Industries (up 4.24%), SAIL (up 4.02%), Tata Steel (up 3.65%), Vedanta (up 3.24%), JSW Steel (up 2.74%), National Aluminium Company (up 2.04%) and Hindustan Zinc (up 1.93%) advanced. Titan Company jumped 7.59% to Rs 1276.

Reliance Industries gained 2.86% to Rs 1425. L&T advanced 0.56% to Rs 1293.95. Bajaj Auto slipped 4.09% to Rs 3155. TCS was up 0.18% to Rs 2107. Honeywell Automation jumped 14.40% to Rs 31785. PNB fell 1.05% to Rs 56.75. Shriram Transport Finance Company surged 6.58% to Rs 1051.65. Sun Pharmaceuticals advanced 2.06% to Rs 426.10. GlaxoSmithKline Pharmaceuticals crashed 11.71% to Rs 1454.60.

In the US data on the manufacturing sector from the Institute for Supply Management, the purchasing manager’s index rose to a six-month high of 50.9% in January. Media reports showed that OPEC members are planning an emergency meeting for discussing large production cut. The outbreak of the Coronavirus and China’s efforts to stop the spread mean the economy will grow slower this quarter than first thought, according to economists.