The correlation between the CSI 300 and the Nifty 50 indexes survived Xi Jinping’s ascent to power in 2012 and Narendra Modi’s election in 2014. Donald Trump, however, has succeeded in driving through a wedge.
Singapore, 1st May 2017: US president Donald Trump has managed to do what Chinese President and Indian Prime minister could not do upon being elected to their respective offices.
The correlation between the CSI 300 and the Nifty 50 indexes survived Xi Jinping’s ascent to power in 2012 and Narendra Modi’s election in 2014. Donald Trump, however, has succeeded in driving a wedge. The link between equity prices of the world’s two most populous economies is now the weakest since at least the 2008 financial crisis. Trump’s effect has severed the relations between Indian and Chinese stock exchanges.
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In some ways, the decoupling predates the US presidential election. Markets that ebb and flow in tandem 30 to 40% of the time had developed minds of their own by the time Britain voted to leave the European Union last summer.
However, correlations are supposed to be mean-reverting. The continued divergence of China and India this year, with the Nifty’s 21% jump in dollar terms overshadowing a 5% gain in the CSI 300, shows that Trump’s policies may be prolonging the separation.
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It isn’t that investors have become relatively more bullish on Indian earnings compared with those in China. On a price-earnings basis, the Nifty has on average enjoyed a 40% premium over the CSI 300 since early 2012. The gap, which widened to almost 100% when Modi’s election as Indian prime minister started to look like a cinch, is currently 29%.
Even so, every gain in the Indian benchmark is making investors sceptical. A friendless rally, as Gadfly has argued, is good for the market because it’s keeping investors focused on how, for example, Trump’s proposed clampdown on H-1B work visas would hurt India’s software exports. But companies like Tata Consultancy Services Ltd and Infosys Ltd are anyway stoking the embers of a dying industry. What’s not getting enough attention is the impact of the other Trump proposal – “tax reforms”.
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Now, a 15% US corporate tax rate is probably a chimaera, but if the ultimate political compromise in Washington is for a meaningful reduction in what companies pay, the lift to their profitability is bound to make them search for growth markets.
As New Delhi’s own tax reforms pave the way for a common domestic market of 1.25 billion people, some of those US investments could head to India.
While India has a massive jobs deficit, the almost 6% gain in the rupee this year suggests that becoming the next factory to the world with the help of a cheap currency is not on Modi’s wish list. That’s one more reason why a recoupling of the Chinese and Indian markets is unlikely to happen soon.
Greece, November 3, 2016: The mass exodus of people from the middle eastern countries such as Syria Somalia and Iraq to Europe has the European Union (EU) leaders in a state of panic. With millions of refugees seeking shelter in Europe, each country is trying to fend for itself and many in response have closed their respective land borders restricting migration.
EU has also brokered the EU-Turkey refugee deal in an attempt to curb the growing number of refugees. In this depressing turn of events, the Khora community is trying to improve the standard of living of the refugees.
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Khora community is run by volunteers from different backgrounds ranging from International development to building and teaching in Exarchia, Athens. It is an anarchic place and has such a history of feuds with the government that even the police avoid wandering into the place.
The Khora is run in a five-story building with amenities ranging from dentists to human rights lawyers. It is a legally run organisation that provides a safe haven for the refugees, at least for a short while. Ali shokri, a christian individual who fled Iran due to religious persecution says”Most people want to come here as they need everything from food to education”.
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One of the most distinctive attributes of this community is its free restaurant system which draws refugees to it. A Syrian cook named Hasan Mansur works here and even tries to make staple Syrian and Lebanese food for the refugees .It is also undergoing some work to provide an improved centre.
Another volunteer Lisa Bernte was found saying”The reality is that the borders are closed and politics is not going to change all over Europe. The people are stuck here for a very, very long time”. Additionally, with the legal procedure of migration in Europe painstakingly slow, there does not seem to be any respite for the refugees in the near future. So the community is also trying to prepare the refugees for a long haul by teaching them Greek. Moreover, the closing of the Macedonian border depicts a bleak picture.
People were also found taking self-defense weekly with every age group pitching in, not surprising with the firebombing of near shelter housing refugees.