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General

On Slack: Battered Asian stocks, Confirmation Bias, Corporate Debt at Recovery Risk, Excessive Diversification, Risk Premium, Ropy Rupee Recall and more….

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The Slack Discussions

Slack Logo2The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there (Premium subscribers only), pop us a note or login here using your premium credentials.

A brief summary of some of the interesting things discussed there in the last few days:

#bonds: Investors wary of more losses as battered Asian stocks, bonds steady – for now

Asian markets have steadied after two weeks of heavy losses in which investors rushed funds out of the region as they repositioned for a Trump presidency, but these markets remain vulnerable to further sharp capital outflows. Hindu Business Line

#bonds: Franklin Templeton fined ₹10 lakh

The securities market regulator SEBI has fined Franklin Templeton Mutual Fund, Franklin Templeton Trustee Services Private Ltd and Franklin Templeton Asset Management (India) Private Ltd ₹10 lakh for forming an “informal investment committee” and for including the international CIO in the investment committee. SEBI found that the committee violated SEBI (Mutual Funds) Regulations 1996. Hindu Business Line
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#bonds: Rs 7.4 lakh cr corporate debt at recovery risk, likely to impact shareholders’ return

Around Rs 7.4 lakh crore out of the Rs 30.20 lakh crore total debt (at FY16) of 500 companies may face a cash flow recovery risk, which may also impact shareholders’ return, according to India Ratings and Research. Economic Times

#macronomics: Dear RBI, about your balancesheet in this newly demonetised world

FT Alphaville

#general: Morgan Stanley cuts Flipkart valuation by a steep 38% to just $5.54 bn

Morgan Stanley has marked down Flipkart’s valuation  asmuch as 38 percent to $52.13 a share for the quarter ending September as against $84.29 a share in the previous quarter. With this markdown, the company’s valuation stands at $5.54 billion. First PostUnderstanding Candles

#general: Behind demonetisation, Narendra Modi’s plan to remake Indians

Modi is advancing an ambitious and long-term experiment in India that aims to re-engineer human souls and minds as much as socio-economic realities. Livemint

#fx-commodities: Oil Jumps as Iraq Says It’s Ready to Cut, OPEC Unanimous on Deal

Oil rallied from a two-week low after Iraq said it’s ready to reduce production and OPEC ministers are unanimously in favor of a supply cut as ministers meet for a summit in Vienna. Bloomberg

#general: Why Equity Investors Earn Risk Premium

Owning equities is about living in regret for 94% of the time – a strong reason for getting paid an extra reward called equity risk premium. Bloomberg Quint

#general: RBI relaxes cash balance requirements for lenders

In a statement, the central bank said that all scrapped currency notes held in their chests will be counted as part of their cash balance. Money Control
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#general: Multiplex, airport shops must follow normal MRP

There cannot be two maximum retail prices (MRPs) for the same packaged item within a state, the consumer affairs department has said in its advisory to state governments. This means that not just bottled water, but all packaged items, including beverages, cannot be sold at two different MRPs in shops, multiplexes or airports. Times of India

#general: Are Jan Dhan accounts being misused? Unlikely

The increase in bank balance in Jan Dhan accounts is not extraordinary as they are being used as much as regular bank accounts, following demonetisation. Livemint

#general: The ropy rupee recall – Modi’s attempt to crush the black economy is hurting the poor

According to J.P. Morgan, an investment bank, Indians were making do at the end of November with a little more than a quarter of the cash that had been in circulation at the beginning of the month—and this in a country where cash represented 98% of all transactions by volume and 68% by value. Economist

#general: Demonetisation as a means of extinguishing black money may be a pipe dream

There may not be any demonetisation at the end of it all; did the govt count its chickens before they hatched? Business Standard

#fx: Indian rupee’s plunge costs unhedged funds dearly

Indian companies will need to repay about $10 billion of foreign-currency bonds and loans by 31 March, 93 % of that in US dollars. Livemint

#general: People’s problems only for one or two quarters, says Arun Jaitley

The FM thanked Odisha Chief Minister Naveen Patnaik for backing the Centre on demonetisation and the GST. Business Standard

#fx: How banks and RBI managed FCNR redemptions

The forex market saw an acute dollar shortage and negative forward premium in November. Business Standard

#backtobasics:

Cliff Asness: A Brief and Biased Survey of Quantitative InvestingYoutube
Common Mistakes of Momentum InvestorsDual Momentum
Confirmation BiasHuffington Post
Excessive Diversification Is Pointless & Damages ReturnsIntrinsic Investing
Mutual Fund Cut-Off Timings That You Must RememberWealth Architects