Linkfest – 102

Wednesday, March 20th, 2019

Some articles from across the web in the last few weeks:

India leads the pack in active management – Ritholtz

The Aldi disruption – The Guardian

The Nifty 50 no longer reflects the Indian economy – Saurabh Mukherjea

Is philanthropy growing in India? – Bloomberg Quint

The future of diamonds is synthetic – Youtube


Management lessons from India unInc

Tuesday, March 12th, 2019

Nice video by Raghu Raman talking about how Indian SMEs function. There are so many lessons we can learn from India unInc which most corporates discount as being unorganised and therefore not worth examining.


Monthly Market Summary: February 2019

Friday, March 8th, 2019

We look at returns of various asset classes such as equity, debt, gold, crude oil and the Indian rupee in our latest monthly market summary.

We use data for these charts from Investing.com

Global Equities

Developed markets continued to rally in February. Emerging markets, including India fell by about one per cent in the month. Long term returns have been healthy in the US and in India.

Fixed Income

Indian bond yields remained range bound around 7.5 in the month.

Gold

Gold moved higher initially, but moved back toward 1300 dollars per barrel toward the end of the month. If the commodity moves strongly away from 1200-1400 dollars per barrel, it would give a better indication of the long term trend.

Oil

Oil continued to rally, closing near the 66 dollars per barrel mark. This is still much lower than the value of 86 seen in October of last year which is a positive development for the Indian economy because of our large dependance on oil imports. It is important to keep an eye on this figure as it can have a destabilising effect on our macros.

Indian Rupee

The Rupee was range bound during the month with a slight depreciation against the Japanese Yen.


Linkfest – 101

Wednesday, March 6th, 2019

Some articles from across the web in the last few weeks:

Be aware of the risks in debt funds – Moneycontrol

Americas Student Loan Problem – Buzzfeed

The FED vs. Bond vigilantes – Pragmatic Capitalism

A bullish indicator for market breadth – Alpha Ideas

Investing in lumpsum – Of Dollars and Data

Howard Marks – CFA Institute

Poland: Europe’s growth champion – Mostly Economics

Edges That Won’t Go Away – A Wealth of Common Sense

Credit Risk pricing in NBFCs – Bloomberg Quint

Winds Of Change For Corporate Borrowings – Bloomberg Quint

Sooner or Later, Technology Companies Will Offer Investment Services – Morningstar

Not Caring: A Unique and Powerful Skill – Morgan Housel

Averages Are Clean But Actual Results Are Messy – A Wealth of Common Sense


Vishal Khandelwal on Investing

Wednesday, February 20th, 2019

Great talk by Vishal Khandelwal at the Value Investing summit in Kuala Lampur. He quite neatly captures the pitfalls and challenges to successful long term investing. It is a great starting point for investors looking to understand how to approach investing in financial markets.

You can find the presentation slides to this talk on his website: Safal Niveshak.

I particularly liked the way he simplified the discussion to 5 key points down to remember when investing:

  1. Staying humble
  2. Practicing inactivity
  3. Thinking and acting long term
  4. Giving due credit to luck, and finally
  5. Keeping it simple


Linkfest – 100

Monday, February 18th, 2019

Some articles from across the web in the last few weeks:

Four policy signals from the Budget – Hindu Business Line

The Biggest Valuation Spread in 40 Years – Meb Faber

Fickle Fortune – Of Dollars And Data

The Futility of Market Timing – Albert Bridge Capital

Low-Priced Stocks – Safal Niveshak


Developments in Cooperative Banking

Wednesday, February 13th, 2019

The RBI recently released its Report on Trend and Progress of Banking in India 2017-18. In the report they have a whole section dedicated to developments in cooperative banking. Cooperative banks play a significant role in boosting financial inclusion because they provide credit to the unbanked segments of society. I found some of the data and analysis quite enlightening especially because there is not much coverage about these institutions in the financial media. Here are some of the key charts and takeaways.

Growth of cooperative institutions has been lower than the overall banking sector. According to the report, cooperative institutions accounted for only 11 per cent of the total assets of scheduled commercial banks (SCBs) in 2017 compared to 19 per cent in 2004-05. Stringent measures by the RBI have led to consolidation in the Urban Cooperative banks (UCBs). From the report:

The Reserve Bank pursued an active licensing policy for UCBs during 1993-2004, which led to a sharp increase in their numbers. Subsequently, as signs of incipient financial fragilities in the sector became evident, the Reserve Bank enunciated appropriate regulatory and supervisory policies in its Vision Document (2005) involving inter alia merger/amalgamation of weak but viable UCBs and closure of unviable ones. As a result, the number of UCBs declined (Chart V.2). Maharashtra, which has the highest number of UCBs, accounted for the largest number of mergers, followed by Gujarat (Chart V.3).

But even though the number of UCBs have come down, the ones that were left have seen a large increase in their asset base which speaks to their stronger financial position.

Traditionally UCBs have had higher level of NPAs than Scheduled Commercial Banks (SCBs). Since 2015-16, however, the position has reversed, with NPAs of SCBs increasing sharply after the asset quality review (Chart V.12).

These are very encouraging trends and the RBI has even created a scheme for voluntary transition of UCBs to small finance banks in 2018. This would enable a graduation pathway for cooperative banks to become small finance banks and possible to become full fledged banks, allowing them to have a pan-India presence and the ability to carry out a wider variety of activities. This is critical in light of the fact that UCBs are increasingly facing competition from new players like payments banks, SFBs and NBFCs. If they are able to upgrade themselves and compete with such institutions, we would have a much stronger and more inclusive financial system.


Humanity and AI

Monday, February 11th, 2019

Another great talk from the a16z Summit by Frank Chen who is a partner at Andreessen Horrowitz. A lot of the discussion about AI is around the disruption it creates to jobs, both in high skill and low skill professions. Tech-optimists on the other hand talk about how technology eventually creates new jobs that we unthinkable before that would balance out the job losses.

In this talk, the presenter helps us to see that the discussion is not about humans versus AI. The key is to have AI take over the more routine tasks while allowing humans to handle more non-routine creative tasks. This helps productivity improve even more than either humans or machines can do individually. The video has lots of cool examples of how this is currently being implemented across industries in the present time and is well worth a watch.


Monthly Market Summary: January 2019

Monday, February 4th, 2019

We look at returns of various asset classes such as equity, debt, gold, crude oil and the Indian rupee in our latest monthly market summary.

We use data for these charts from Investing.com

Global Equities

The Sensex was flat for the month but has underperformed its peers in both emerging and developed markets. Broader markets rallied sharply in January whilst the Sensex remained flat. However, barring the Sensex, most equity markets have given negative returns in the last one year. Longer term return have been positive across the board

Fixed Income

Indian bond yields gradually moved back up to 7.6 in January, reversing the previous correction in December.

Gold

Gold moved higher, continuing its rally over the last few months. If the commodity moves strongly away from 1200-1400 dollars per barrel, it would give a better indication of the long term trend.

Oil

Oil rallied in January, closing near the 60 dollars per barrel mark. This is still much lower than the value of 86 seen in October which is a positive development for the Indian economy because of our large dependance on oil imports. It is important to keep an eye on this figure as it can have a destabilising effect on our macros.

Indian Rupee

The Rupee depreciated broadly against most currencies, but especially against the pound. This is probably a reflection of Brexit related issues as well as foreign investor concerns on fiscal slippage on the part of the Indian government in the run up to elections this year.


Linkfest – 99

Friday, February 1st, 2019

Some articles from across the web in the last few weeks:

Are Market Moves Happening Faster? – A Wealth Of Common Sense

Blockchain Can Wrest the Internet From Corporations’ Grasp – Wired

Macro overview of the Indian economy over the last 5 year – Livemint

Stress and Investing – Safal Niveshak

The past, present and future of farm loan waivers in India – CNBC TV18

How Japan is overcoming the demographic challenge – Urbanomics

Every choice has an opportunity cost – Seth’s Blog

Real estate under pressure – Youtube


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