The Global Reflation Trade (US + China + Brazil + India + Germany + Russia + UK + HK)

The Global Reflation Trade.  As on 2 Jan 2020.

If you think India has outperformed global markets, think again.  Our performance has been par for the course.

Loose liquidity conditions from global central banks have sloshed money pretty much to all stock markets.

In fact, if you compare with Brazil and Russia, we have under-performed because they have not received anywhere near the foreign fund inflows that India has received.

Dow Jones Industrial Average (USA).

China A50 Index (China).

Bovespa (Brazil)

DAX (Germany)

IMOEX (Russia)

The only indices that have lagged the global reflation trade are FTSE 100 (UK) and the Hang Seng (Hong Kong), for reasons of Brexit and China respectively.

We are showing the charts step by step adding 1-2 markets in each chart as the final chart looks terribly cluttered.

India’s stock market has benefited from liquidity sloshing around globally.  It may not have much to do with amount of economic activity.

Dow Jones with Sensex overlay (blue). Notice how both are at the same level currently.

Dow, Sensex and Bovespa (Brazil).

Dow, Sensex, Bovespa (Brazil), MOEX (Russia), and DAX (Germany).

Dow, Sensex, Bovespa, MOEX, DAX, China A50, UK FTSE 100 and Hang Seng (HK).  Notice how all markets except 2 have performed virtually equally.