THE FALL HAS BEGAN AND WE ARE NOT BOTHERED
Well I am not happy to write my 400th
Research Article on this topic but I can’t help being an economist and
Journalist. Over the last 6 years I have covered a vast range of topics and subjects
but its seems I have many more to write. Its not china alone, there are many things in
between. Chinese corporate profits and loan books of banks in terms of disbursement
are significantly dropping. According to the latest data released before the
markets opened revealed that Chinese banks gave 597.8 billion yuan ($90.76
billion) in new loans for December, notably lower than the 708.9 billion loaned
out in November, sparking renewed concerns over the economy's health. Further
significant drop in commodity prices leads stupendous losses on the Chinese company’s
books of accounts. On the other hand the high dividend which corporate across the
globe used to pay are travelling on the path of drying up. The steep
price declines in everything from iron ore to gold to agricultural products where prices have come down to
the level of decade back will create significant threat for the global economy.
It’s not china alone. Many things are acting detrimental to the world GDP
growth in 2016. Flight of capital will
increase more in coming days as China have asked its overseas china bank subsidiaries
to invest and buy Chinese stocks. This will create major sell of in other asset
class in different countries. It’s the same strategy adopted for buying QE
bonds designed by different economies.
Yes my statement might scare you but the hard
core fact is that employment and new investments are drying up and we are not
noticing that rather we are all busy about China. Iran will start its
production of crude and this will take prices to hell. Now around $350 billion
of investments from OIL Players have been withdrawn as crude is no longer a
profitable business. These further results to kill of Jobs and unemployment.
Consumption is getting a step back taking cues from the global economy.
Currency devaluation of one economy will cost trillion to the global economy in
2016 and this will create a panic and loss of investments. Already around 3.2
trillion worth of value proposition of assets have been wiped in 15 days of 2016
and I can bet investors are running away taking cues from Greece matter where
banks were locked in for withdrawal. Equity investors should wait before taking
investment decision of going for long positions. Exporting countries are in deep problems and
their budget cut downs are going to reduce consumption which related to inter
trade of business. This is what is happening and this is what will go on unless
crude prices accelerate. Importing countries might be celebrating Christmas for
a long time once crude fell below $50. Now these countries might have been able
to improve their CAD and Fiscal position but they will not be contributing much
to the global GDP. Yes the hard fact is that these importing or developing
countries contribution to the global GDP is less compared to the exporting
countries or consumption countries. US rate hike was designed to stop the redemption
of sovereign wealth funds but I hope that will not be protected any more. QE
will come up very soon and also it will be in the form of Joint Banks created
by different economies based with global trade impacts which means give and
take.
Europe is having problem of refugees and this
is going to create real problem for its societies and income inequality based
problem in the society. Global economic condition don’t even give the cushion
of taking long bets and financial gimmicks of healthy ROI and free cash-flows
and other jargons are not supportive currently. Invest in opportunities and be prepared
to go for long in unavoidable circumstances. The current problem is that we are
having a generation of young fellows who are more scared and more in pains of
financial collapse. We have destroyed the myth of healthy living and dreaming
new heights of life. Safety of living is of more important. Dont forget those who are suffering losses they are hardly going to come back.
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