Tuesday, May 30, 2017

3rd Market Participant Survey

"Men who are unhappy, like men who sleep badly, are always proud of the fact."
—Bertrand Russel (British, 1872-1970)
Word for the day
Hedonism (n)
Devotion to pleasure as a way of life, e.g., The later Roman emperors were notorious for their hedonism.
The doctrine that pleasure or happiness is the highest good.
Malice towards none
Will a uniform GST of 28% on movies mean no "tax free" movies post July 2017?
First random thought this morning
So many students appear to have scored near perfect scores in subjects like Political Science, History, Literature, Psychology in recently announced CBSE 12th class results.
To me this means that the system encourages only those students who are conformist. The examiners are trained to punish the students who like to differ and offer alternate views on history and political issues. This cannot be a good sign for a progressive society.
If I am HRD minister, I would assign 75% marks to debates, group discussions, and presentations in humanities, economics and business studies and 25% to written examination that tests writing skills, and basic understanding of broad principles. Pure science subjects, accounting, maths could remain as they are.

3rd Market Participant Survey

Last weekend, I repeated my annual survey of market participants, randomly selected from my phone contact list. This time I selected a larger sample (49) against 30odd on past occasions.
The objective was simple, viz., to assess the mood of the market. as usual, the people I called were a boring mix of investment managers, credit managers, corporate bankers, equity analysts, economist, wealth managers, insurance brokers, some seasoned investors and few corporate treasury managers. Each conversation lasted 10-25minutes.
As usual, I asked one simple question to all the people I had called – “what are you most excited about and what is bothering you most at this point in time?” Unlike the last time, the responses this time were more in unison. People mostly appeared hopeful but could not cite any concrete reasons for their optimism. Macro data was the only thing they could cite with conviction.
Admittedly, my sample suffers from inadequacies, but only 8 out of 49 people appeared confident about the direction of markets and economy even for next six months.
The key highlights of my impromptu conversation with market experts could be listed follows:
(a)   Considering that the markets have been turbulent for most of last week, all the people I called appeared surprisingly free and interested in talking to me. Most were interested in discussing politics, GST and a variety of individual stocks from midcap and small cap arena. It seemed that everyone is very much into the markets and invested to the capacity.
This, in my experience, usually occurs close to the market top of a market cycle.
(b)   There is an old saying in context of financial markets – “in good times few market participants have time for gaining knowledge; and in bad times few are inclined”. From my discussion it appeared that not many people are bothering to go below headlines and beyond front pages. Yet another sign of market topping.
(c)    An overwhelming 70% were most concerned about geopolitics, global politics, Fed meeting, and GST disruptions.
(d)   When specifically asked, opinion was vertically divided on the threat of China slow down. However, everyone agreed that should this exacerbate, Indian markets will sink into a deep bear phase. Surprisingly, most appeared bullish on INR.
(e)    32/49 felt that rates have already bottomed and may not fall from here in couple of years. No one was therefore bullish on recovery real estate. Though as a cautious footnote people exuded optimism over affordable housing.
(f)    Rural consumption and public investments are consensus favorite themes. No one is willing to care about the contrary data on these.

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