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ah furusato a global investor or publisher Gloom Boom or doomed report came up father Shelly subsea belly-up go homie patottie take you up go soon as I hear makka pakka Anisa septicemia global stock market crash Santo hazhar make acetyl or metal him too much hot Doha Zafira me are pigment achieve obscene or do huzzah Panther me Sunni meet this percentage shot economy or stock market key given at night distinguish very macabre never occurred et Ornish cuckoo junker fancy bonanni for Pentecost Russia track ma camel gap is the job in dunya me who you are fixing Takata hey Jack would believe in Tata hey to see business Parker tahini wish groom are Stoppers if she was a security marfa Berkey gloom doom and doom report card specificities occur to him but after Sultan who to came our Father Hong Kong beretta hey Mark favor limited K directed him licking hard summit goodie to knock economy pertaining as a back to him master see her Dodgers emerging markets economic innovation enemy BBQ maharathas ill-health Mark barber moon is to chalice Lee suit identified away or / highly highway Jeanne - Teresa's father economically dsdm World Economic Forum le Kiki will kick it above the models God issues is of discovery riding the Millennial storm mark father's path to profit in the financial markets are the greed money elusion the confusions of the confusion see who need dunya nee na sip economy or market is semaj me uncle Lou hamana bulky Harbury cotton Ichabod until I janicoo a bibliography head Phil hull duniya ke saamne sank at a global trade worker Dooley Aikido economic superpower Sheen or America unless omni head lake in sanford for Estonia medic Rahab alga Kira can see her at periodic kiss anybody here we see para item Jonny G mark poverty right mark thanks so much for being with us on Z business today the markets have corrected quite bitter since the end of January in India we've seen a cut-off at nine and a half percent the Dow Jones is down eight and a half percent do you think this is the start of a bear market or do you think the correction is done you know maybe a year later and if you're at the major high you don't know whether the major high has been reached or whether that's just the correction I'd say this short term we may be somewhat oversold not enormous Lee but somewhat oversold from from a longer term perspective we are nowhere near oversold we've rallied in the US on the S&P from 666 too high January 26 of so if we're down 10% it's nothing in comparison to the pole market and the second point that is important to realize when the market went down in February after January of 26 actually retail investors were net buyers of equities so they were not negative I'd like to see more negative sentiment that hasn't really taken place yet so I think the market still has at least if it's just a correction then another 10% downside risk I'd say that would be also the case for India and but the problem in the u.s.
is that if the market drops another 10% he could very well also drop 40% because as the market goes down the earnings will disappoint and the fundamentals will suddenly not look all that great mother what are the positive triggers or positive risk for the markets because yes growth in the u.s. is firming up but everybody's worried about the threat of a trade war it doesn't add to positive sentiment at all there what is about the level of debt that is there on the balance sheets of many countries and the US doesn't seem to be really scared about a default at all the interest rates are only going up higher there what is the good news that will take the markets higher in the long term well that's a very good question why should markets go up in the very long run I mean if you look at the last hundred years in the US or so the trend of markets has been on the upside but it's also been on the upside because there is built-in inflation in the system and the level of credit in other words debts have been rising steadily and money supply has been growing and more recently in the last 1012 years the money supply has been growing rather strongly and the expansion of central bank's balance sheet has very high so I think there are reasons for stocks to go up in the long run the way in in gave you both properties 30 years ago you would have to really make a huge mistake that these prices wouldn't have risen so the trend for real estate prices also upside and the price for art is on the upside because we live in inflationary times that inflation is a very complicated phenomenon you have sometimes inflation in commodities and sometimes you have it in consumer prices the last 20-30 years we had more inflation in consumer prices but we had very high inflation in asset prices stocks bonds commodities real estate collectibles liens and so was all this has gone off the lot in price and I think if I look back at the time when I started to work in 1970 at that time salaries were relatively high compared to assets to asset crises in other words in America as an example the market capitalization as a percent of the economy was just 30 percent now it is over 150 percent so what we have had in the world is an explosion of asset prices and now instead of the economy driving asset prices asset prices are driving the economy and I think we could have if the S&P drops say 20 25 percent then it will have a very negative impact on the economy what are you charge mock what is the chance the S&P is falling 20 25 percent what's the good news there isn't any actually you know you said inflation is creeping up where central banks have been begging for inflation but inflation really hurts countries like India which are large importers I'm still trying to see that good news I don't see much yeah but this is the point I think you asked me just now what is the probability of the market dropping 25 percent I think the probability is actually very high it may be 90 percent but we've gone up in a straight line between February 2016 and today until this January we never had more than a three percent correction in the S&P this is the longest stretch of a market going without even a 3% correction so we've gone up a lot what is the probability of it dropping 20 25 percent I think it's very high okay if the S&P is let's assume it falls 25 percent from the peak at MIT in January what does it mean for the Indian markets because India runs a large current account deficit we are already taxing capital inflows there is an election coming up usually in in markets don't connect when an election comes up but the odds seem to be against the markets going up this time in India well let's put it this way around the world pretty much everything trades around the SNP so if yes it'd be tonight is that I'm not saying it will be but if if the S&P is down 10 percent in one week the likelihood that other markets are also down is very high because fund managers today invest internationally so they see the US market going down the other markets may not have gone down yet so they start selling there to rebalance their portfolios the same for index funds and as I said before in earlier interviews I am optimistic about India in the long run but there are some conditions have that have to be met we need less bureaucracy we need more say institutionalized government that is more professional but that is also the case in the u.s.
so I'd say everything considered I'm still quite optimistic about India but I'm not optimistic about the stock market because the stock market in 2016 was below 23,000 at the March low and now we went to 36,000 400 and I think a 20% correction would not be unusual so would you say the Indian stock markets are more vulnerable than the emerging market peers because of local conditions because of taxing capital coming into the market because of rising inflation because of the risk surrounding the elections are they more vulnerable than their peers not really I mean I think the Indian economy is relatively stable economy that does not depend all that much on exports not export dependent like Taiwan South Korea and to some extent Singapore Hong Kong but I think the problem for India is if other markets go down it will also be tracked down number two the political situation as you know I don't think so bad but it's not brilliant either mr.
Modi who I kind of admire certainly everything is relative in this world his intellect is a little bit superior to what we find in the u.s. among politicians but the perception among foreign large investors is that the political situation in India still unstable maybe but maybe less than in Europe and in the u.s.
so as I said relatively speaking I'm quite optimistic about India but obviously if the markets around the region and in the world go down then India will also be tracked down and that the second point I'd like to make the Indian stock market consists of say a large number of shares I don't know 5,000 or 10,000 shares and some of these shares of they're expensive they sell for 45 50 times earnings I don't think that these stocks have not upside potential other stocks they are reasonably priced they have a lot of upside potential so I think that active manager stop specific he will do okay I don't think the index will do very well because the index is heavily weighted with this high market cap weighted stops all right mark many thanks for joining us and see business thank you
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