AKG weekly charts - Issue #140
This newsletter is a weekly selection of 10 charts hand-picked across the internet and research reports which pertains to our investment strategy and bring an updated insight and perspective.
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Aug’24 review of our equity research strategy- Special Situation & Wealth Compounders [We have initiated 1 new stock position in FC SS in the month of August. Visit www.fintrekkcapital.com for more details]
[1] The global bond rally has regained momentum due to economic concerns in the US and weak figures in the Eurozone. Value of global bonds rose 0.3% last week to $69.29tn, almost a fresh ATH. Rate cut cycle likely to accelerate around the globe as growth slows down.
[2] September is a month of pain for the Stock Market in US but October tells an entirely different story. There have been 61 rallies of 10%+ since World War 2. Of those, 19 have started in October, by far the strongest month. So smart people know what to do - buy the dip in September. Be selective as rally is becoming narrow everyday despite new paper coming in the form of IPOs!
PS : Trend in Indian markets is also similar, add to that seasonal weakness of Shradh period (20 Sept - 2 Oct) this year!
[3] MSCI India in dollar terms is the largest weightage now, more than MSCI China. A lot of that has got to do with Indian indices outperforming and Chinese indices underperforming in the post Covid period. Can we get to a level where China was in 2010?
[4] Chinese banks have built a $100bn short against the US dollar to prop up the yuan — and hedge funds are eager to get in on the trade. At the center of it all are transactions known as FX swaps. These have quietly become a key tool for state-run Chinese banks seeking to prop up the yuan during periods of outsized selling pressure!
[5] All 3 indicators in the chart below are signaling heightened risk of recession. Maybe they are wrong and it’s different this time, but it does kind of line up with some of the price action we’re seeing in both risk assets and defensive assets!
We have recently initiated a new stock position in our 'Wealth compounder' as a cyclical bet in Fintrekk capital equity research products #FCWC
This lending financial company is one of the largest companies in its operating segment with a first-mover advantage in under-penetrated markets and a diversified reach. The company expects to grow its AUM by ~20%+ in FY25 by expanding its reach in remote locations and catering to customers in tier 4 & 5 cities. It expects spreads to remain stable (5.5%+) with a slight improvement in opex and strong asset quality trend to deliver RoA of 3.5%+ Led by an experienced management team with strong corporate governance, the company has seen a strong asset quality trend over the past few years (GNPA at <1.5%+ over the past three years). Its hybrid underwriting model, effective credit-risk management policies and in-house collections team have helped to keep credit costs in check.
For full disclosure/disclaimers, please visit : https://fintrekkcapital.com/disclosures
To subscribe to such reports, please visit : https://fintrekkcapital.com/#subscription
[6] Currently, China dominates the battery market, producing over 75% of the world’s EV batteries. India has a long way to go with EV penetration and building EV infrastructure!
[7] According to the SEBI study, 42.7% of retail investors sold their IPO allotments within just one week of listing. High-Networth Individuals (HNIs) and corporates sold off 63.3% of their shares, while banks exited 79.8% of their positions within the same timeframe. The market has experienced such a strong bull run that if you had participated in all IPOs over the past four years and secured allotments, it would have been nearly impossible to lose money.
h/t
[8] With new P2P regulations released by RBI last month, the industry has come to stand still. I have been writing regularly that a lot of the stuff happening is downright unethical and in grey area of regulations. For example: Taking deposits should not be a P2P lending platform job. Unregulated lending for leveraged bets in options, SME IPOs and for leisure like travel etc should be strictly regulated under these P2P platforms.
[9] As per a Moody’s Ratings report - Risks from a restrictive monetary policy stance linger. In addition, geopolitical frictions and accompanying policy-driven geoeconomic fragmentations have long-term implications for cross-border trade, investment and growth. Ongoing conflicts in Ukraine (Ca stable) and the Middle East are sources of uncertainty.
Rising protectionism, including restrictions on cross-border trade and investment flows and immigration, has associated output costs and can reduce global welfare. Businesses face increased costs of risk mitigation because of the rapidly changing geoeconomic landscape, including for building supply chain redundancy and resilience, insurance or other forms of risk management. Cyber and climate risks add to these burdens.
[10] As per latest UNCTAD report (see here), the amount of global foreign direct investment (FDI) has been on decline since peaking at US$2.05trn in 2015. In fact, a percentage of world GDP, FDI peaked at 4% of global GDP in the year 2000 and has been on decline since then. In the year 2023, global FDI fell to US$1.3trn or 1.27% of global GDP.
Disclaimer:
This newsletter is for information and educational purposes only. In this material, Amit Kumar Gupta (SEBI registered Research Analyst, INH100009327) has used information that is publicly available and is believed to be from reliable sources. While utmost care has been exercised, the author does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers, before acting on any information herein should make their own investigation & seek appropriate professional advice. Any sector(s)/ stock(s)/ issuer(s) mentioned do not constitute any recommendation and the RA may or may not have any future or existing position in these. All opinions/ figures/ charts/ graphs are as on date of publishing (or as at mentioned date) and are subject to change without notice. Any logos used may be trademarks™ or registered® trademarks of their respective holders, our usage does not imply any affiliation with or endorsement by them. Past performance on charts may or may not be sustained in the future and should not be used as a basis for comparison to infer any investment ideas