Five reasons India's stock market is sinking even when its economy is growing

[Owaiz]

Post GFC, senior tranches suffered loss even at lower correlation levels.

this was because of the very fact, that repo deposits (hot money deposits) were moving through off the books CDO SPVs.


this is characterized in many post GFC (nature of hot money deposits!) studies!
as seen below, correlation levels cooling down (highlighted in red circle!) when CDS spreads were rising (which does not make sense initially!)

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Not sure where exactly this is from, but the reference to BNP and Spain and correlation between reference and counterparty makes me think this is studying the risk that the seller of default insurance itself is not able to pay out in case of a default by the insured entity, because it itself has defaulted.

Typically, these CDS trades are quite illiquid and expensive to get in and out of. Interesting from an academic perspective, but not the kind of stuff hot money typically does in practice.

 

[Mighty_Dragon_Strike]

Not sure where exactly this is from, but the reference to BNP and Spain and correlation between reference and counterparty makes me think this is studying the risk that the seller of default insurance itself is not able to pay out in case of a default by the insured entity, because it itself has defaulted.

Typically, these CDS trades are quite illiquid and expensive to get in and out of. Interesting from an academic perspective, but not the kind of stuff hot money typically does in practice.

this is from Gunter Meisner Correlation Risk Modelling, Wiley 2014.


it shows, low correlation levels can cause higher CDS spreads (low correlation is caused by the inflow of hot money deposits!)

joint default is the concept (due to correlation) discussed here, to identify why CDS spread rise in the presence low correlation levels, concept equally valid for any trade that involves CDS.

For instance, rule will also hold for CDSs' required to insure CDO or CLO tranches!

 

[retaxis]

If Indian GDP grew as they say over the last 30yrs, Indians wouldn't be living in slums and dying of arsenic water and most polluted place in the world.

To question the fake GDP numbers by looking at the reality on the ground is just questioning the lies and exposing the truth.

 

[Yasser76]

If Indian GDP grew as they say over the last 30yrs, Indians wouldn't be living in slums and dying of arsenic water and most polluted place in the world.

To question the fake GDP numbers by looking at the reality on the ground is just questioning the lies and exposing the truth.

Take out their top 50 rich the numbers look very very different

 

[retaxis]

Take out their top 50 rich the numbers look very very different

Yes there is massive imbalance in Indian society as well. A few are super rich but that just means the average indian is that much poorer according to GDP. I don't trust their GDP cowdung numbers just like the IMF and world bank gives them a C rating which is bullshit made up numbers.

One only needs to look at their lifestyles and realise the last 30yrs of growth has taken them no where.

 

[Owaiz]

this is from Gunter Meisner Correlation Risk Modelling, Wiley 2014.


it shows, low correlation levels can cause higher CDS spreads (low correlation is caused by the inflow of hot money deposits!)

joint default is the concept (due to correlation) discussed here, to identify why CDS spread rise in the presence low correlation levels, concept equally valid for any trade that involves CDS.

For instance, rule will also hold for CDSs' required to insure CDO or CLO tranches!

Sounds interesting, though I would say more than 99% of short -term hedge fund money going to emerging markets would be restricted to FX, interest rates, stock indices and some very liquid stocks. The bid-offer spread on an emerging market credit or credit index would typically eat away most of the expected profit over several days and the risk of getting stuck if a market event happens is high.

 

[Owaiz]

If Indian GDP grew as they say over the last 30yrs, Indians wouldn't be living in slums and dying of arsenic water and most polluted place in the world.

To question the fake GDP numbers by looking at the reality on the ground is just questioning the lies and exposing the truth.

India is a poor country and some people even in much richer countries stay in slums. However, it has still outperformed much of South Asia and especially Pakistan, which once used to be richer, or less poor, in economic growth.

A recent UNDP study put the incidence of poverty in Pakistan at around 38% and in India at around 16%. Those are consistent with the officially reported GDP per capita income numbers for the two countries.

And Bangladesh, which used to be the dirt poor East Pakistan, has lower poverty and higher nominal per capita GDP than both.

 

[Vikramaditya1]

Why on earth would I want you to prove GDP data is fake? Such a course of action would lead you to demand reform and transparency from your government. I have merely pointed out the discrepancy. Please preserve it.

Yeah surely anyone can be an expert at data dissemination from behind a screen without understanding what it means and even easier to claim it's all fake.

There is no compulsion in reallocation.

There is naturally, Indians markets are attractive because you can easily reallocate without causing Indian national accounts to take a hit on it's reserve. Which allows investment to happen and return on these investments when you take those away. They also look at the credit rating.

 

[Vikramaditya1]

Take out their top 50 rich the numbers look very very different

GDP is not wealth.

 

[Mighty_Dragon_Strike]

GDP is not wealth.

great post!

would be interesting to know, the ranking of highest gold imported by each country in Asia!


that would reveal a lot of details between land ownership differences, GDP, per capital income, inflation etc etc

 

[Master Chief]

Yeah surely anyone can be an expert at data dissemination from behind a screen without understanding what it means and even easier to claim it's all fake.

There is naturally, Indians markets are attractive because you can easily reallocate without causing Indian national accounts to take a hit on it's reserve. Which allows investment to happen and return on these investments when you take those away. They also look at the credit rating.

Love these nothing burgers.

(A) I am not claiming fakery on the basis of my own analysis. Other Indians have claimed as such. I am but the signpost.

(B) Selling Nifty stocks and loading up on US bonds in a single private transaction pathway that remains free from Central Bank involvement/charges is no different to what happens in UK FTSE.

 

[Vikramaditya1]

Love these nothing burgers.

(A) I am not claiming fakery on the basis of my own analysis. Other Indians have claimed as such. I am but the signpost.

Sure buddy. The IMF is apparently that easily fooled. You don't simply fabricate GDP figures out of thin air. Doing so would require manipulating or reconciling thousands of interconnected economic statistics, many of which are publicly available and subject to independent scrutiny.
India is a highly politicised country where political allegiances often colour perceptions of even routine economic developments. Since the BJP is in power, some are reluctant to acknowledge positive economic performance under its administration. Instead, they assume the GDP figures must be fabricated, because accepting their validity would mean acknowledging that the BJP government might have done things right.

(B) Selling Nifty stocks and loading up on US bonds in a single private transaction pathway that remains free from Central Bank involvement/charges is no different to what happens in UK FTSE.

So what are you trying to say? That investors are leaving because for the sole reason of "losing trust in Indian economy?"

 

[Vikramaditya1]

great post!

would be interesting to know, the ranking of highest gold imported by each country in Asia!


that would reveal a lot of details between land ownership differences, GDP, per capital income, inflation etc etc

You're writing word salad that has nothing to do with GDP either. Good import in Asia? Land ownership? GDP per capita, income, inflation? What???

 

[Mighty_Dragon_Strike]

You're writing word salad that has nothing to do with GDP either. Good import in Asia? Land ownership? GDP per capita, income, inflation? What???

highest gold imports, per country, in each year for the last 30 years


In Chine, gov. owns land. unlike Pak, and India.

so, Pak. and India, now have to perform twice as good as China.

Gold imports would show if thats the case, as its ownership would show, how exposed the economy is to 1. inflation 2. per capital income and other measures for instance debt to GDP etc etc



to be clear, without any drag of land ownershio, Chinese economy can still outperform all the rest!


as land valuation is not a factor in inflation and other economic measures!

 

[Master Chief]

The IMF is apparently that easily fooled.

I never claimed the IMF was deceived. The common Indian citizen who resides below the notorious skew-inducing ultra rich threshold may well be. IMF is simply another institution with an agenda. Indeed, some Indians have made similar observations in this regard. It's not necessarily or blatantly "pro-India" to be fair.

IMF cannot help but carry some sort of an agenda due to its own funding nature. USA, naturally, provides the largest source, with other G7 economies also contributing large shares.

Anyway, am straying a bit, so will leave it at that for consideration by our dear forum readers.