AKG Weekly Charts - Issue #48
Welcome to the latest edition of #AKGweeklycharts
This newsletter is a weekly selection of 10 charts hand-picked across internet which pertains to our investment strategy.
The charts focus on various forces and factors that influence our Investment outlook and brings an updated insight and perspective.
[1] Indonesia has imposed ban on export of edible oil from 28th April. India imports a large part of of it palm oil consumption from Indonesia. Prices already at a high. FMCG staples will have a hard time if the ban is not lifted over next 8 weeks.
Why 8 weeks?
Our scuttlebutt has shown that FMCG companies have already been intimated about force majure by their suppliers. Inventories (warehouse and on sea) is not more than 2months. Snack manufacturers have even lower inventory
It's a bigger worry than Ukraine war at this moment.
[2] The Netflix stock has gone from the top tech bet in CY21 to down in doldrums. The fall has thrown many investment lessons for investors - none being more important than to have a strategy and change it as the new and relevant information comes.
More thoughts here on a Linkedin note.
[3] In the light of rate hikes by US and other developed markets, the valuations have tapered off significantly (led by the tech sell-off). Is it the right time to start international investing?
PS : The ban by SEBI on mutual funds to not allow more than 10bn$ limit of funds in overseas investing has shifted the trend to direct investing via fintech platforms and GIFT city. Will this accelerate?
[4] Though India's industrial output posted an annual increase, it decelerated by 4.7% sequentially owing to a broadbased decline across sectors. And this is mostly when RU crisis accelerated.
PS : IIP is released with a one month lag. So Feb data comes in April, and so on. Even though it is not latest, it does give a picture on how sector wise changes happening.
[5] Cathie Wood’s flagship ARK Innovation ETF is down 45% YTD, but investors are still pouring money in. Despite the drawdown, investors have funneled >$658mln into the fund YTD.
Read more here in WSJ
[6] After pandemic-driven jump, official FX reserve holdings stabilized at $12.8tn. But USD’s share of FX reserves fell to ATL <59%. De-dollarization trend for this decade has started. As more countries tend to diversify their reserves, dollar status as reserve currency will come under severe pressure.
[7] US Inflation at a 4-decade high is countered by Fed by rate hikes and sapping liquidity (by tapering the balance sheet). FOMC rate hike of 50bps next week is priced in with 'similar' rate hikes over next two meetings. But in a world where supply chains are broken, will it be enough to bring down inflation?
I have my doubts, but equity markets will remain volatile till this adjustment is made.
[8] Fed rate cycle always end with deleveraging events. Exceptional profits made by corporates during the Covid-19 phase has deleveraged their balance sheet substantially. When Fed does the same by tapering balance sheet and finishes, equity markets tend to form a bottom.
[9] Consolidation may continue to benefit large companies in sectors with considerable presence of unorganized companies. Survial of the fittest?
Source : Livemint
[10] IPM growth declined in the latest data set due to high Covid-base. If and when inflation tops off, raw material prices correct and power becomes cheaper, Indian pharma companies which have undergone time and price correction over last few months will become attractive again (though one needs to be selective in choosing companies as per future business prospects)
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The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other related transactions.