2020 GLOBAL STOCKS MELTDOWN ~ AN OPPORTUNITY ?
Cash Courage Conviction
Correction was long overdue in Global Stock Markets .In previous editions we’ve spelled out the disconnect between rising Stock Indices and declining Economies on the strength of Liquidity Flows .COVID-19 introduced the correction globally in Stocks across Continents right from the start of 2020 with Capitulation seen last week before a stunning pullback.Yet Global Indices are in the red in 2020 with South America, Europe, Japan and Thailand plunging the most. Quite interestingly China, where the Corona Virus COVID-19 originated, has seen its Indices barely drop because it closed its markets early in 2020 and restricted short selling on re-opening on February 3,2020. In fact SZSE is in the green!
Here’s how Global Indices fared in 2020 till date
March 13, 2020
|Euro zone||EURO STOXX 50||3793||2586||-31.8|
|Italy||FTSE Italia A||25980||15954||-38.6|
|Asia & Asia Pacific & Australia|
|Hong Kong||Hang Seng||28544||24033||-15.8|
In our view markets will continue to still seek lower levels in the coming months with intermittent pullbacks as we saw on Friday. It is difficult to call the bottom as it’s difficult to call the duration, spread and intensity of COVID-19.But it’s easy to call ,based on historic evidence, that after this crisis passes and after any US & Global Recession the bounce back in Equities will be significant in the years ahead. These declines are introducing some sanity back on Valuations on the bourses and give some great opportunities in value buying for the long term. India also is in a relatively sweeter spot on the recent Saudi Arabia’s Oil Shock plunging Oil prices lower and which we expect to stay lower all of 2020.We lucidly explained this in the previous edition
Major Spoilers for any recovery later in 2020 could be that the COVID-19 crisis prolongs late into 2020 and hopefully not into 2021 and Geo Political Conflicts will intensify across global hotspots in the Middle East and Asia as economic stress pushes Nations to the wall.
We would strongly recommend an Asset Allocation exercise in sync with your Risk Profile to :
- Those with Direct Equity in their Portfolios to review to take a decision if warranted on repositioning in stronger selections that are now available at much lower prices even if it involves taking a loss on some existing selections and even consider infusing more into Equity gradually
- Those with no exposure in Direct Equity ,it’s a great time to consider initiating an exposure
Cash, Courage, Conviction all three are being called for here. In 2020 it calls for Vision and History supports here. On Hindsight with a 20/20 Vision in 2022 and 2023 you should be smiling in your Direct Equity Portfolio
If you’re on our Fundamental Wavelength here, do connect to take advantage
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