In this briefing:
- China’s Pharmaceutical and TCM Industry
- ECB, BoJ Suck Wind – EA Threatened with Japanisation
- India Monthly Report: Jan’19 – Feb’19
- India: Outlook on Capex Recovery Continues to Brighten
- BoJ Steps in as ECB Exits
1. China’s Pharmaceutical and TCM Industry
Chinese healthcare is fascinating in that one minute you can visit a doctor practicing the latest modern medicine and then stop at the corner store for traditional Chinese medicines specializing in random herbs and fungi. The dichotomy is a truly Chinese experience. However, China is increasingly a manufacturing and therefore export destination for both modern and traditional Chinese medicines (TCM).
2. ECB, BoJ Suck Wind – EA Threatened with Japanisation
By Charles Dumas, Chief Economist
- Monetary stimulus fails export-dependent savings glut countries
- Japan now accepts huge budget deficits and negative interest rates
- EA needs broad structural reform to avoid Japan’s deep malaise
3. India Monthly Report: Jan’19 – Feb’19
Indian indices were the least performing among the select global indices with S&P BSE Sensex and Nifty 50 generating returns of 0.01% and negative 0.73% in domestic terms respectively. In Dollar terms they fell by 2.18% and 2.89% respectively. Indian Rupee witnessed deprecation of 2.18% during the period and fell from 69.40 USD/ INR to 70.95 USD/ INR. Among the select indices, Hang Seng was the best performer with dollar returns of 10.89% and among the select currencies, South African Rand was the best performing with an appreciation of 7.88%.
| Performance of Select Indices during Jan’19 | ||
| Index | Returns in Domestic Currency | Returns in USD |
| S&P BSE SENSEX | 0.01% | -2.18% |
| NIFTY 50 | -0.73% | -2.89% |
| Nikkei 225 | 6.19% | 6.84% |
| Dow Jones Industrial Average | 7.08% | 7.08% |
| HANG SENG | 11.19% | 10.89% |
| FTSE 100 | 3.49% | 7.06% |
Among the Sectoral indices, Nifty Pharma was the best performing with returns of 4.91% in dollar terms and Nifty Realty was the worst performing with falling by 17.41%
Performance of Indian Sectoral Indices during Jan’19 | INR Returns | USD Returns |
NIFTY PHARMA | 7.25% | 4.91% |
NIFTY IT | 0.67% | -1.52% |
NIFTY FMCG | -0.35% | -2.53% |
NIFTY FIN SERVICE | -0.64% | -2.81% |
NIFTY PVT BANK | -1.97% | -4.11% |
NIFTY BANK | -2.10% | -4.24% |
NIFTY AUTO | -3.55% | -5.66% |
NIFTY METAL | -3.77% | -5.87% |
NIFTY MEDIA | -7.00% | -9.03% |
NIFTY PSU BANK | -10.50% | -12.45% |
NIFTY REALTY | -15.57% | -17.41% |
4. India: Outlook on Capex Recovery Continues to Brighten
As per the CSO, gross fixed capital formation (GFCF) has grown above nominal GDP for 4 consecutive quarters now (latest data for September quarter). This, after GFCF grew slower than nominal GDP in 20 of the preceding 21 quarters. Capex cycle is thus picking up. And there are good reasons to expect this continue in the foreseeable future. Capacity utilisation is increasing in a broad-based manner. Liquidity conditions have improved, and cost of capital is likely to fall. Corporate profit cycle is no longer a headwind, although it is not yet a strong tailwind. The nascent signs of a recovery in the capex cycle are thus likely to get stronger in the months ahead.
5. BoJ Steps in as ECB Exits
By Shweta Singh, Managing Director Global Macro
- Global central banks turning dovish
- But BoJ maybe the only DM central bank ‘properly’ injecting liquidity this year
- European debt – including Italian BTPs – could benefit the most
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