The Perils of Greed & Fear
Bulls vs. Bears
Paraphrasing Marie Curie’s famous words. Nothing in life is to be feared, only understood… Man's greed drives a bull run while his fear drives a bear run. This greed and fear cycle plagues the human psyche and wreaks havoc on our investments.
And the only answer to this havoc is 'Dynamic Balance' with resilience and calm. This is the sure path to success especially now during such euphoric high times.
In our last 30 days we have had some interesting articles which pertain to our clients personal gains and losses. We analysed the market reactive behaviour of Shalini Kapoor which gave us insights on how greed and panic in the ups and downs of the market are detrimental to wealth creation. We also had one insightful article which explained the fallacies of keeping an easy to remember password… how easy it is for someone greedy to defraud you by hacking your password and what are the do's and don’ts to avoid this situation and lose control of a financial instrument or channel. In this time of uncertainty, every little bit helps and to secure our investments for our next of kin we had also discussed WILLs – why they need to be registered and in which cases a probate will be made necessary. This was mainly to avoid unnecessary panic and fear in the ‘receivers’ mind in their time of grief. Do check these informative articles out as we bring you your monthly news update from the markets.
SEBI Allows T+1 Settlement for Stocks
Consumers are relieved that SEBI has extended the option to choose between T+1 and T+2 settlement cycles for stocks on an optional basis to the NSE & BSE. This will come into effect from 1-Jan-2022. Currently the settlement cycle is T+2 days. It means that when an investor buys the stock, it will get credited to their demat account on the next working day EOD or if an investor sells the stocks, the sale proceeds will get credited into his/her account on next working day EOD instead of current 2 days.
Due to this announcement, India will be one amongst the few countries who have the fastest settlement cycles, and this move is a follow up to the SEBI tightening the upfront margin requirements, from 1st Sept-2021. Currently the US follows a T+2 settlement cycle. This announcement may create some fear in FIIs since there will be an initial operational challenge in funding arrangements, working the different time zones, a lengthy information flow between custodians, and syncing up with forex market etc
The collapse of China’s Property giant ‘Evergrande’
There is a global equity market sell-off on 20-Sept-2021 and the attributed reason for this sell-off is the ‘Collapse of Evergrande – China’s property developer’. Greed and Euphoria pulled Evergrande AND buyers AND banks AND PE lenders into a murky cycle which is now bordering on the fear of collapse.
There are already many articles on the internet linking Evergrande with the Lehman global financial crisis in 2008. However, following are main points to ponder:
Evergrande has a debt of $300 billion and while few of the payment obligations are coming due in the 4th week of Sept, they are unlikely to pay it. As of now, there is no solution for this from Evergrande and the Chinese authorities as well. There is ‘a massive pile of debt coupled with illiquid Real estate properties’ and the demand for Real estate is slowing down in China.
1. According to China’s recent policy intervention in Real estate market, there is a forced deleveraging of Real estate Cos to improve their financial health following the country’s crackdown on Tech & EdTech giants.
2. The Evergrande event is building the fear of ongoing deceleration of the Chinese economy.
3. Most of Evergrande’s debt exposure is to Chinese lenders and not global. Wait and see how it will pan out globally & whether any ripple effect will be seen in India.
4. After a one-way bull rally in global equities, there is a fear that this event will create volatility.
Inclusion of India’s G-Sec into Global Bond Index
Global Index provider FTSE Russell which placed India’s G-Sec on watchlist for possible inclusion in its debt Index and this inclusion is expected to happen on or around March, 2022. This is one of the most significant event with regard to our bond markets. Most of the positives are yet to be accounted or considered by both Government as well as regulators i.e RBI, and analysts.
Some of the up-front positives associated with this significant event:
1. FII inflows into Indian debt for past decade was close to 36 billion USD. However, the expected inflows from FIIs post this event is 40 billion USD in next two years according to the estimates.
2. Due to the significant expected inflows, consumers fear their bond yield is going to be checked
a. Government is euphoric as this will reduce their borrowing rates.
b. It is also expected to fuel the greed for more returns through the stock markets.
3. As per Morgan Stanley, there is euphoria that the Indian currency could appreciate minimum 2% due to this inflow.
YEH DIL MANGE MORE...
fast payment systems – UPI & Paynow
According to RBI’s press release, India’s UPI will link with Singapore’s Paynow and it will enable instant as well as low cost fund transfers between India and Singapore. Due to this, Indians will be able to do the fund transfer to People of Singapore & also will be able to receive funds from there simply through their mobile and it is expected to be operational from July, 2022 onwards.
This is significant milestone in the development of infrastructure for cross border payment transfer between India and Singapore
Performance of Commodities,
Currencies and Equity Market Indices
- AS ON 15 SEPTEMBER 2021 -
The Perils of Greed & Fear
Bulls vs. Bears
Paraphrasing Marie Curie’s famous words. Nothing in life is to be feared, only understood… Man's greed drives a bull run while his fear drives a bear run. This greed and fear cycle plagues the human psyche and wreaks havoc on our investments.
And the only answer to this havoc is 'Dynamic Balance' with resilience and calm. This is the sure path to success especially now during such euphoric high times.
In our last 30 days we have had some interesting articles which pertain to our clients personal gains and losses. We analysed the market reactive behaviour of Shalini Kapoor which gave us insights on how greed and panic in the ups and downs of the market are detrimental to wealth creation. We also had one insightful article which explained the fallacies of keeping an easy to remember password… how easy it is for someone greedy to defraud you by hacking your password and what are the do's and don’ts to avoid this situation and lose control of a financial instrument or channel. In this time of uncertainty, every little bit helps and to secure our investments for our next of kin we had also discussed WILLs – why they need to be registered and in which cases a probate will be made necessary. This was mainly to avoid unnecessary panic and fear in the ‘receivers’ mind in their time of grief. Do check these informative articles out as we bring you your monthly news update from the markets.
SEBI Allows T+1 Settlement for Stocks
Consumers are relieved that SEBI has extended the option to choose between T+1 and T+2 settlement cycles for stocks on an optional basis to the NSE & BSE. This will come into effect from 1-Jan-2022. Currently the settlement cycle is T+2 days. It means that when an investor buys the stock, it will get credited to their demat account on the next working day EOD or if an investor sells the stocks, the sale proceeds will get credited into his/her account on next working day EOD instead of current 2 days.
Due to this announcement, India will be one amongst the few countries who have the fastest settlement cycles, and this move is a follow up to the SEBI tightening the upfront margin requirements, from 1st Sept-2021. Currently the US follows a T+2 settlement cycle. This announcement may create some fear in FIIs since there will be an initial operational challenge in funding arrangements, working the different time zones, a lengthy information flow between custodians, and syncing up with forex market etc
The collapse of China’s Property giant ‘Evergrande’
There is a global equity market sell-off on 20-Sept-2021 and the attributed reason for this sell-off is the ‘Collapse of Evergrande – China’s property developer’. Greed and Euphoria pulled Evergrande AND buyers AND banks AND PE lenders into a murky cycle which is now bordering on the fear of collapse.
There are already many articles on the internet linking Evergrande with the Lehman global financial crisis in 2008. However, following are main points to ponder:
Evergrande has a debt of $300 billion and while few of the payment obligations are coming due in the 4th week of Sept, they are unlikely to pay it. As of now, there is no solution for this from Evergrande and the Chinese authorities as well. There is ‘a massive pile of debt coupled with illiquid Real estate properties’ and the demand for Real estate is slowing down in China.
1. According to China’s recent policy intervention in Real estate market, there is a forced deleveraging of Real estate Cos to improve their financial health following the country’s crackdown on Tech & EdTech giants.
2. The Evergrande event is building the fear of ongoing deceleration of the Chinese economy.
3. Most of Evergrande’s debt exposure is to Chinese lenders and not global. Wait and see how it will pan out globally & whether any ripple effect will be seen in India.
4. After a one-way bull rally in global equities, there is a fear that this event will create volatility.
Inclusion of India’s G-Sec into Global Bond Index
Global Index provider FTSE Russell which placed India’s G-Sec on watchlist for possible inclusion in its debt Index and this inclusion is expected to happen on or around March, 2022. This is one of the most significant event with regard to our bond markets. Most of the positives are yet to be accounted or considered by both Government as well as regulators i.e RBI, and analysts.
Some of the up-front positives associated with this significant event:
1. FII inflows into Indian debt for past decade was close to 36 billion USD. However, the expected inflows from FIIs post this event is 40 billion USD in next two years according to the estimates.
2. Due to the significant expected inflows, consumers fear their bond yield is going to be checked
a. Government is euphoric as this will reduce their borrowing rates.
b. It is also expected to fuel the greed for more returns through the stock markets.
3. As per Morgan Stanley, there is euphoria that the Indian currency could appreciate minimum 2% due to this inflow.
YEH DIL MANGE MORE...
fast payment systems – UPI & Paynow
According to RBI’s press release, India’s UPI will link with Singapore’s Paynow and it will enable instant as well as low cost fund transfers between India and Singapore. Due to this, Indians will be able to do the fund transfer to People of Singapore & also will be able to receive funds from there simply through their mobile and it is expected to be operational from July, 2022 onwards.
This is significant milestone in the development of infrastructure for cross border payment transfer between India and Singapore
Performance of Commodities,
Currencies and Equity Market Indices
- AS ON 15 SEPTEMBER 2021 -
