Take the Money and Run. It is the advice that has always come from the "wise men" of the markets together with the fall of the autumn leaves. 2021 is no exception. The reports of the big houses suggest that stock portfolios should be lightened with prudence, especially those in the USA, in view of a seasonal correction. There will be time, then, to take advantage of a possible Christmas rally. It may be the right time to look at emerging markets. At least to the more solid ones who, mindful of the lessons of 2013, have limited their exposure to the dollar, or can count on the increase in raw materials. The logic of large numbers could then favor a change of course. Over the past ten years, Wall Street's blue chips have guaranteed a return of 356 percent against 188 for European ones. But Morgan Stanley's emerging markets index rose only 66 percent, disappointing expectations to the point that some speak of a "lost decade". Today, in the face of the surge in raw materials, the trend could change. But the conditional is a must when dealing with major global issues: even the gurus, in fact, make mistakes.
THE CHINESE TILE. This is the lesson coming from the great disappointment of the current year: the Chinese Stock Exchange. At the beginning of 2021, it was a common opinion that China would lead the recovery of the post Covid-19 markets. On the contrary, thanks to the return of the Delta variant, its Csi 300 index of Shanghai and Shenzhen which, above all, Hong Kong, turned red from February onwards. And investors, both domestic and Western managers, have fallen on the head of Evergrande, the real estate company with debts of 306 billion dollars which, choked by the liquidity crisis, will not pay interest on various bonds on Monday. An injury, reports Reuters, which will cost a lot to the funds of Amundi or Ubs (exposed on bonds for 93 and 83 million dollars respectively) and to other primary houses. Also because, for now, the authorities seem inflexible: an editorial by Hu Xijin, director of the Global Times, the daily tabloid of the Communist Party of China, wrote this morning that the real estate company should not bet on the government bailout, considering itself "too big to fail ”. In short, a good opportunity to punish the rich according to President Xi's principle of "common prosperity". But, looking at the Chinese Stock Exchange, all is not lost, warns a report by Generali Investment this morning: the market reaction, we read, is exaggerated. China A-shares are starting to make a comeback in the global equity universe.
THE GOOD FRUITS OF INDIA. Opposite situation for the other major Asian power: India. The Mumbai stock exchange has so far experienced another exceptional year after the good results of the 2019/20 two-year period. And so, against a decline of about 18% in the Chinese stock exchanges, the Indian index has recorded a gain of more than 20% since February. The increase was favored by the inflow of capital from abroad, largely linked to the parallel exodus from China and other markets in the Far East. According to Goldman Sachs as of last August 31, the funds for 42,8 billion dollars that had left Shanghai (but also Hong Kong and Taiwan) have headed for the Indian stock exchange, favoring the boom in utilities, consumer goods and software. But the rise has also infected the middle class: during 2021 the Stock Exchange has 55 million new shareholders who made possible the triumphant debut on the Stock Exchange of Zomato, the Indian Alibaba that grew by 80% on the day of its debut. But is it to be trusted? Today the price-earnings ratio on the Indian Stock Exchange is thirty times and, BlackRock notes, gold-backed loans at the Bank of India have grown by 300 percent.
FULL GAS FLY. The Bank of Russia has announced that a new increase in interest rates, necessary to fight inflation and curb the euphoria unleashed by the boom in raw materials, "cannot be ruled out". The Moscow Stock Exchange is today in first place among the world markets with a performance of more than 25%. Of course, the robust recovery of oil and other commodities was behind the phenomenon. The prospect of the forthcoming opening of the North Stream gas pipeline to Germany, an almost obligatory move to supply Europe with the required natural gas, is a good guarantee for the stability of an economy which today can count on solid fundamentals both in terms of the trade balance and of internal finance. And, thanks to oil profits, the average dividend is 4,6 percent.
