Tag: stimulus

Amid global risk-off, Julius Baer sees China market rally on stimulus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mark Matthews, Chief Investment Officer of Bank Julius Baer & Co, predicts that amid global risk-off the Chinese stock market may see a rise due to a possible new economic stimulus and the introduction of a fund to help stabilise stock prices.

Factors that could aid the Chinese market

China is reportedly thinking about increasing its budget deficit for 2023 with a fresh round of stimulus. This plan includes issuing at least 1 trillion yuan (equal to $137 billion) in extra government debt, which will be used for investing in infrastructure projects.

Reports suggest that China is also considering the creation of a stock stabilisation fund to help boost investor confidence in the stock market. This potential plan may involve investing in local stocks through established financial institutions and professionally managed funds, as reported by the Financial Times. The government’s investment could be matched by other funds and institutions working together, as mentioned in the report.

Matthews said another thing that could make investors feel more positive is a possible meeting between Chinese President Xi Jinping and US President Joe Biden. This meeting might happen during the Asia-Pacific Economic Cooperation summit in San Francisco, which is scheduled for November 15 to 17.

The last time Biden and Xi met was back in November, during the Group of 20 summit in Indonesia.

Matthews’ view on other global markets

Despite the rising geopolitical tensions due to the Israel-Hamas conflict, Matthews expects global markets to gradually start gaining.

The markets are going down now because of the concern about what’s going to happen…but history shows us that these geopolitical events do not tend to be disruptive for the market. I think, generally, markets around the world will all go up,” he told CNBC-TV18.

Ultimately, he noted, what moves share prices is the earnings of the companies that these shares represent.

He pointed out that 85% of the 32 S&P 500 companies that reported their third-quarter earnings have beat consensus estimates by nearly 10%. The overall earnings are also likely to be better than expected, he said.

Matthews’ view on the Indian market

“India is our favourite market in Asia,” Matthews said, highlighting they have invested their client’s money in the country.

While the overall trajectory of the market is going to be upward, there will be times when the market may not outperform, he said, noting that the fourth quarter could be one such quarter.

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Dean Kim of William O’Neil predicts India’s GDP growth to outshine China; Unveils preferred stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s economic growth is projected to be stronger not only in the coming year but also in the foreseeable future. This indicates that China needs to put in more effort to stimulate its economy. If China decides to implement additional stimulus measures, it could positively impact the market and potentially attract more liquidity towards their economy. However, as things stand currently, India stands as a promising and well-performing market.

In an interview with CNBC-TV18, Dean Kim of William O’Neil + Co expressed optimism regarding India’s economic growth in comparison to its neighbour China. He revealed that the GDP growth forecasts for India were anticipated to be more robust for the next year, indicating promising prospects for the country’s economy.

He said, “I was looking at the GDP growth forecast for China versus India and India is still stronger in terms of GDP growth headline into next year and beyond. So, China has more work to do in terms of providing more stimulus to its economy. If they were to come out with more stimulus – that could be good news for the market and perhaps that could sway the liquidity over to China, but as we are currently sitting, I still see India as a good performing market.”

In addition to discussing macroeconomic trends, Kim also provided valuable insights into the stock market. He disclosed several stocks that William O’Neil + Co. was closely monitoring and identified some high-potential investment opportunities in various sectors.

Kim highlighted Titan, an Indian retail company renowned for its diverse product range, including watches, jewellery, eyewear, and more, as one of the best picks. The company’s consistent growth and strong market position make it an attractive pick for investors seeking exposure to India’s booming retail sector.

With the rise of e-commerce in India, Indiamart Intermesh has emerged as a prominent player in the online marketplace segment. Kim recognised the company’s potential to capitalise on the increasing digitalisation of businesses, making it an exciting prospect for investors interested in the technology and e-commerce sector.

Kim also suggested considering investments in Siemens and SKF India, the  companies heavily involved in the infrastructure sector. As India continues to invest in its infrastructure development, these companies are likely to benefit from increased demand for their products and services.

Shifting the focus to the automotive sector, Kim pointed out Ashok Leyland as a company worth considering. With India’s ever-expanding transportation needs, Ashok Leyland, a major player in the commercial vehicle industry, stands to gain from the country’s growing infrastructure and logistics demands.

Minda, a leading player in the auto components industry, was another stock recommended by Kim. As the automotive sector evolves and advances, the demand for reliable and innovative auto components is expected to rise, presenting opportunities for Minda and its investors.

In the technology sector, Kim identified Coforge as a stock with considerable potential. Coforge’s expertise in providing IT solutions and services could position the company to benefit from India’s expanding digitalisation initiatives and the global tech industry’s growth.

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Centre mulls keeping measures outside of Budget to deal with economic disruptions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fed officials discussed potential reduction in stimulus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Federal Reserve officials started discussing at their meeting last month the timing and mechanics of reducing their huge monthly bond purchases, which are used to keep longer-term interest rates in check.

The debate, revealed in the minutes of the Feds June meeting released on Wednesday, reflected a broadly positive outlook on the economy among Fed policymakers but also some concern that higher inflation could prove more persistent than the central bank has previously indicated. Still, economists saw little sign that the Fed was any closer to hiking interest rates or reducing its bond buys.

A few policymakers mentioned that they expected the conditions for beginning to reduce bond purchases would be met somewhat earlier than they had anticipated … in light of incoming data, the minutes said.

The Fed is buying USD 120 billion a month in Treasury securities and mortgage-backed bonds to keep longer-term interest rates low and encourage more borrowing and spending. Those purchases have flooded financial markets with cash, potentially fueling asset bubbles, some economists have argued. The Fed has said that it will keep making the purchases until the economy makes substantial further progress toward its goals of full employment and an inflation rate slightly above 2 percent.

But there is a clear split on the Fed’s policymaking committee, with some officials cautioning that recent economic reports provide a less clear signal about the underlying economic momentum. The June 15-16 meeting was held before the most recent jobs report, which showed the economy had gained 850,000 new positions last month.

Several of these (officials) emphasized that the (Fed) should be patient about making any changes to its bond purchase plans, the minutes said.

Paul Ashworth, the chief US economist for Capital Economics, a consulting firm, said the minutes were not as hawkish as we suspected. In Fed parlance, hawks typically worry more about inflation and are less concerned with keeping unemployment low, while doves take the opposite view.

There seems to be only limited support for beginning to taper the monthly asset purchases anytime soon, Ashworth said.

After the June meeting, the Fed issued a statement and a set of economic projections that signalled that it would potentially dial back its low-interest rate policies earlier than it had previously projected. The policymakers forecast that they would hike the Fed’s benchmark short-term interest rate twice by the end of 2023. In March, they had indicated no rate hikes would occur before 2024.

The minutes showed Fed officials expressed optimism about the economy, even as they said it was still far from meeting their employment and inflation goals.

Policymakers observed that economic activity was expanding at a historically rapid pace, led by robust gains in consumer spending, the minutes said.

Most Fed officials expected inflation to decline in the coming months as some supply chain bottlenecks eased, the minutes said. Fed Chair Jerome Powell has repeatedly said that recent jumps in consumer prices would be temporary and largely reflected disruptions surrounding the reopening of the economy.

But a substantial majority of policymakers said that there was a risk inflation could stay higher than expected, because of concerns that supply disruptions and labour shortages might linger for longer and might have larger or more persistent effects on prices and wages than they currently assumed.

Most economists still expect a reduction or tapering, of bond purchases to begin by late this year or early next year, with an announcement of the change potentially occurring in late August at the Fed’s annual conference at Jackson Hole, Wyoming.

Some differences over the timing of the tapering have emerged among the Fed’s regional bank presidents, with Dallas Fed President Robert Kaplan saying last week that he favoured pulling back on the purchases sooner rather than later.

San Francisco Fed President Mary Daly, in an interview with The Associated Press, said last week that it would be appropriate to consider tapering later this year or early next year. But she cautioned that the economy is far from full employment.”

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

G20 to discuss uneven recovery from COVID crisis, officials say

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The world’s financial leaders will discuss on Wednesday how to coordinate policies to prevent their virus-battered economies emerging from recession at highly different speeds, officials said ahead of the virtual meeting. When finance ministers and central bank governors of the world’s top 20 economies hold their video-conference the patchy response to the ongoing COVID-19 crisis will be high on their agenda, officials from the Italian presidency said.

Italy, which chairs the G20 this year, held a briefing ahead of Wednesday’s meeting and officials said the group would reaffirm the need not to ease stimulus measures too soon and discuss how to help debt-laden poor countries.

In contrast to the first meeting of Italy’s presidency in February, this one will be followed by an official communique.

”The first signals are uneven, some economies are picking up well and others are being left behind, this is something that is clouding the global economic outlook,” said one official.

COVID inoculation rates vary widely, with Britain and the United States far outstripping most European Union, Asian and especially African countries.

”At the moment the main instrument of economic policy is vaccinations,” the official said, noting that the United States is also adopting massive fiscal stimulus, which analysts expect will lead to a faster recovery.

”We’re aware that it’s not possible for some countries to get out of this crisis and others not to … so the G20 is the best venue to discuss these aspects and find solutions,” he added.

The G20 will maintain a commitment to reach a deal on minimum corporate taxation levels and taxation of internet giants by mid-year, and will also focus on debt relief for poor countries, the officials said.

For these nations, one option under consideration is to extend a suspension of debt servicing costs that is currently in place until June.

However, there are no proposals at the G20 level to broaden the policy framework for debt restructuring with any new initiatives to forgive debt for countries struggling to pay, the officials said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow