Tuesday, August 26, 2008


Global markets continue to stumble in an uncertain business environment.
Emerging markets like Brazil (BOVESPA Index), India (BSE SENSEX), and China (Shanghai Composite) have had a particularly difficult time.
So are these slowdown fears for real? Over the next few posts I will analyze the impacts of a global slowdown in the backdrop of a highly leveraged and interconnected global economy.
To begin with here are some charts -
Shipping rates
have had a volatile 2008. In the first half of 2008 a weakening USD coupled with high oil prices pushed commodities and shipping rates to new highs.

Is Chinese demand finally slowing? Or is this just a blip on the charts due to the 2008 Olympics?

2008 has been a terrible year for equities.

Fears of a US led global slowdown and a risk averse investing environment have resulted in large outflows from emerging market equities.

2008 so far----

THE LAST 5 YEARS The Chinese stock market is down very sharply since it peaked in the last quarter of 2007.
Indian Equities have fared better, over the 6month and 5 year horizon. Over the last 3 quarters however, growth rates have moderated, and as Indian companies continue to expand, with inadequate local infrastructure(transport bottlenecks and power shortages) and domestic inflation rates of just under 13%, we are in for some challenging times ahead. The Indian Financial sector has fared much better than its global counterparts, but as lending standards tighten, interest rate sensitive sectors like Automobiles and Real Estate are likely to underperform. I will soon put up my update on the Indian Economy.

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