Semester 2 Week 12

Hey Legend!

Hope you’re doing well soldier 💚 welcome to week 12 and the final edition of our newsletter for this semester 😔

Thank you to everyone who has supported our growth, whether it be coming to our events 🥳, spreading the good word 🤝 or reading our fantastic newsletter 📰, we appreciate it greatly 🙏

It was great seeing our members at our seminar last Friday 👩‍🏫, for those unable to attend, we have included a special section covering the key insights from the seminar ✨.

We wish you the best for your exams, keep up the hard work, smash out those practice papers, we believe in you 💯.

The Numbers

The Roundup

This week we examine political elections in India 🗳️, defense programs 🚁🛡️ and the announcement of the e-Rupee 💳. The lobster trade 🦞 between China and Australia is back on the table, so are car sales 🚙. Will the next round of fiscal stimulus in China continue the recent bull run or bring it to an end? Let’s dive right in.

India

The BJP's recent victories 🏆 signal strong political support as the nation gears up for the 2025 elections. 🗳️The government is launching initiatives to enhance manufacturing🏭 and introduce a groundbreaking digital currency.💳 Advancements in technology and military collaborations🔧🛡️ are set to elevate India’s capabilities. 🚀

• The BJP celebrated significant victories in both Haryana and Jammu & Kashmir last week. In Haryana, the party secured a strong majority in local elections, reinforcing its control in a key state. 🏆 In Jammu & Kashmir, the BJP managed to hold onto key constituencies despite challenges, marking a continued presence in the region. 🎉 These results signal a robust strategy from the BJP, while Congress faces an uphill battle to regain influence. 🔥

• The Indian economy is currently facing challenges following the passing of Ratan Tata on October 8, 2024. 🕊️ His death has led to a dip in the financial markets, with investors showing concern over potential instability in Tata’s business empire. 📉 However, the government has launched a $15 billion infrastructure development plan 🚧 aimed at stimulating growth and creating jobs, particularly in the construction and manufacturing sectors.

• In an effort to stabilize the economy, the RBI has introduced a new digital currency, the e-Rupee, which is expected to launch later this year. 💳 This digital currency aims to streamline transactions, reduce costs associated with cash handling, and enhance financial inclusion across the country.🌍 Additionally, India's stock market has shown signs of recovery📈 following recent downturns, driven by optimism around government reforms and a rebound in corporate earnings. 📈 This resurgence reflects growing confidence among investors as the economy navigates through current challenges.💼

• India has recently unveiled plans to develop an indigenous drone program aimed at bolstering surveillance and combat capabilities. 🚁🛡️This initiative includes the development of unmanned aerial vehicles (UAVs)✈️ designed for both reconnaissance🧐 and combat missions.⚔️ Further, India has signed an agreement with Israel for advanced military technology transfers. 🔧These moves demonstrate India’s commitment to self-reliance in defense manufacturing,🏭, aiming to reduce dependence on foreign imports.🌍

China

China announces plans for greater fiscal stimulus 💰🤲 and finally agreeing to lift trade restrictions on Australian lobster imports🦞🚢. China has managed to reverse the declining car sales trend 🚗📈 and also is strengthening economic ties with Vietnam 💪🚆.

• A highly anticipated announcement of fiscal stimulus plans by Finance Minister Lan Fo’an has been criticised by global investors for lacking facts and details 👨‍💼👎. Plans included increasing government debt to support consumers and the housing market💸🏘️, but scepticism around the details of these plans could put an abrupt end to the stock market’s recent bull run 📈🚫.

• China will lift restrictions on Australian lobster by the end of the year, removing one of the last COVID-era Chinese trade restrictions 🦞🚢. In 2019 (prior to the trade restrictions), the lobster trade with China delivered $700 million to the Australian economy, demonstrating the significance of this announcement for both countries 📈🤑.

• Car sales in China are growing again, with latest September figures illustrating a 4.3% YoY growth in sales, reversing a 5 month decline streak by increasing subsidies to consumers purchasing EVs 🚙📈. The subsidy offers $2800 for replacing and older car with an EV 🔁🚘. Electric & plug-in hybrid cars, now account for 52.8% of all vehicle sales nationwide.

• China and Vietnam may agree to enhance cooperation in railway links and agriculture during an upcoming meeting between leaders 🚂🤝. The deals could boost economic ties, by introducing seamless railway links between the two bordering nations 💪. This reflects increasing trust between China and Vietnam 🤞as Chinese manufacturers shift export operations to Vietnam amid U.S.-China trade tensions.

Seminar Notes: An Introduction to Emerging Markets

Last Friday we had the pleasure of hearing Dr. Gaby Berhe Nadari speak on emerging markets.

“The concept of an emerging market is dynamic, not static”

Dr. Nadari emphasised that the concept of an EM is not strictly defined but guidance exists from international organisations such as the International Monetary Fund (IMF) and the World Bank (WB). The IMF broadly describes EMs as nations on track to becoming significant players in the global economy. The WB however, categorises economies based on GNI and economic development.

Moreover, EM criteria varies between MSCI, S&P, and FTSE, reflecting the dynamic economic landscapes of constituent nations. For instance, some countries considered emerging, like the BRICS nations, have become key global players, challenging the position of developed markets (DM) and the traditional definitions of EM. While other countries, Hungary, Czech Republic, and Greece cycle between developed, emerging and frontier status.

“it is not a question of if but when EMs overtake DMs as the leaders of enterprise, innovation and geopolitical influence”

The most attractive attribute of EMs is their growth potential. Dr. Nadari highlighted key levers, such as a rising middle class, urbanisation, and the liquidity of capital markets. Higher consumption, driven by a larger and younger population with a greater willingness to spend further bolsters growth. It is no surprise that EMs are a popular destination for investment as businesses seek to capitalise on this emerging demand.

“With great growth potential comes great volatility, that is the trade-off”

Political instability in many EMs creates uncertainty, complicating business operations and undermining investor confidence. Similarly, regulatory hurdles, characterised by complex and frequently changing legal frameworks, challenge both local and foreign enterprise.

In addition to political and legal risks, EMs are often vulnerable to economic volatility, including fluctuations in global commodity prices and exchange rates. Infrastructure deficits, particularly in rural or underdeveloped areas further hinder the ability of these markets to realise their full potential. Moreover, persistent income inequality and social unrest are also impediments to progress.

“Today the issue is not deciding whether to invest in EM but how much to invest”

Dr. Nadari explained that EMs are expected to continue playing a crucial role in global economic growth. The rise of the middle class, rapid technological advancements, and expanding urban centers make them attractive destinations for investment. However, the risks remain significant, requiring investors and businesses to carefully navigate the political and economic uncertainties inherent in these regions. 

Have a good rest of the week, good luck for exams, we’ll see you legends next semester!

Best regards,

EMN 💚