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Trump Effect triggered Indian and Chinese stock exchanges to decouple

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.

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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%.

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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.

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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.

– prepared by Nikita Tayal of NewsGram, Twitter: @NikitaTayal6 

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U.N. Donald Trump’s Impeachment may be Possible: Key Lawmaker

Comey testified to a House panel on Friday about his role in 2016 election-related investigations of Trump's campaign.

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House Judiciary Committee ranking member Rep. Jerrold Nadler, D-N.Y., arrives for a House Judiciary hearing on Capitol Hill in Washington, Dec. 7, 2017, on oversight of the Federal Bureau of Investigation. VOA

A key U.S. lawmaker said Sunday that Democrats in the House of Representatives could pursue impeachment hearings against President Donald Trump, saying that the U.S. leader had “surrounded himself with crooks” and was part of a broad “conspiracy against the American people” to win the 2016 election.

Congressman Jerrold Nadler, a New York Democrat set to become chairman of the House Judiciary Committee when Democrats take control of the chamber next month, told CNN that lawmakers have to decide “how important” allegations are against Trump, but should pursue impeachment charges “only for serious offenses.”

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In these 2018 photos, Paul Manafort leaves federal court in Washington, left and attorney Michael Cohen leaves federal court in New York. VOA

Nadler offered his thoughts two days after federal prosecutors accused former Trump lawyer Michael Cohen, “in coordination with and at the direction” of Trump, of orchestrating $280,000 in hush money payments shortly before the 2016 election to two women who alleged they had affairs with Trump so they would stay silent before Election Day.

Nadler said that if proven, the allegations against Trump were “certainly impeachable offenses.” That could lead to his removal from office, if the Senate were to convict him by at least a two-thirds vote, a doubtful proposition with Republican control of the Senate continuing in the Congress that takes office in January.

Nadler said lawmakers will have “to look at all this,” along with weighing what special counsel Robert Mueller concludes about allegations that Trump and his campaign colluded with Russia to help him win and that, as president, Trump obstructed justice by trying to thwart the ongoing 19-month probe.

The U.S. Justice Department has a standing guideline against indicting sitting presidents, although they can be charged after leaving office. Nadler said, however, “There’s nothing in the Constitution that prohibits the president from being indicted. Nobody should be above the law.”

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Stormy Daniels speaks during a ceremony for her in West Hollywood, Calif.. VOA

Trump has dismissed the latest allegations against him in connection with the payments to porn star Stormy Daniels and Playboy model Karen McDougal and allegations of Trump campaign contacts with Russia to help him win the election.

He used Twitter on Monday to repeat his frequent statement of “NO COLLUSION” between his campaign and Russia.

“So now the Dems go to a simple private transaction, wrongly call it a campaign contribution,” Trump said. He went on to say “it was done correctly and there would not even be a fine,” further adding that if there were any problems then Cohen would be the one who was liable.

“Cohen just trying to get his sentence reduced,” Trump said.

Trump has called for the end to the Mueller probe, but a Republican lawmaker, Senator Marco Rubio of Florida, told ABC News, “I’ve always supported the Mueller investigation and continue to do so because I think it’s in the best interest of everyone involved, including, by the way, the president.”

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Seven-page government sentencing document for Michael Cohen, President Trump’s former lawyer. VOA

Aside from Cohen, who is set to be sentenced Wednesday and faces several years of imprisonment, Mueller so far has secured guilty pleas or won convictions of Trump’s first national security adviser, his former campaign manager, his former deputy campaign manager, a foreign policy adviser and other lesser figures.

On Sunday, Trump assailed former Federal Bureau of Investigation director James Comey, whom Trump fired while he was heading the Russia investigation before Mueller was named to lead the probe.

U.S.A. Trump
Former FBI Director James Comey, with his attorney, David Kelley, right, speaks to reporters after a day of testimony before the House Judiciary and Oversight committees, on Capitol Hill in Washington. VOA

Comey testified to a House panel on Friday about his role in 2016 election-related investigations of Trump’s campaign and that of his challenger, Democrat Hillary Clinton, a former U.S. secretary of state.

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“On 245 occasions, former FBI Director James Comey told House investigators he didn’t know, didn’t recall, or couldn’t remember things when asked,” Trump claimed on Twitter.

“Leakin’ James Comey must have set a record for who lied the most to Congress in one day. His Friday testimony was so untruthful! This whole deal is a Rigged Fraud headed up by dishonest people who would do anything so that I could not become President. They are now exposed!” (VOA)