5 ms·

"india" is being lumped together just for namesake. I don't think indian market is any less transparent than US/Japan or others.

by tintri 11y ago

berberous 11y ago
Nevsky Capital, a successful hedge fund, just shut down and released an interesting letter to its investors that's worth reading in full. I'm not sure about the transparency of India's stock market, but it did not have nice things to say about the quality of their economic data: "Data releases have become much less transparent and truthful at both a macro and a micro level. At a macro level the key issue is the ever increasing importance of China and India. China is the world’s second largest economy, but already much larger than the US in a broad swathe of sectors. India will be the world’s third largest economy within a decade. Unfortunately their rise is increasing the global cost of capital because an ever growing share of the most important data they produce is simply not credible. Currently stated Chinese real GDP growth is 7.1% and India’s is 7.4%. Both are substantially over stated. This obfuscation and distortion of data, whether deliberate or inadvertent, makes it increasingly difficult to forecast macro and hence micro as well, for an ever growing share of our investment universe." http://www.businessinsider.com/nevsky-capital-closing-letter-2016-1 http://www.businessinsider.com/nevsky-capital-closing-letter...
- chimeracoder 11y ago
  It's really frustrating to see China and India constantly discussed as if they were a single unit, particularly when it comes to economics. Aside from the fact that they are (a) both very large, and (b) both rapidly developing countries/economies, China and India share very little in common. There are challenges to investing in either China or India, but the reasons behind those challenges are about as different as you can get. The underlying issues in the two countries are dramatically different.
  - WalterSear 11y ago
    Perhaps you could tell us what those differences are?
    - dingo_bat 11y ago
      As I see it, India is a functioning democracy with a strong commitment to capitalistic industry. Regulation might be too much/too less in some areas but that will eventually improve. OTOH, China is very close to dictatorial, with the government controlling everything from the exchange rate to every company's policies. For example, we have proper public debates in India about stuff like net neutrality, freedom of the press, and we routinely criticize the government and politicians. That is simply not possible in China. I really do not understand how anybody with even a little understanding of the two countries can lump India and China together in the same political/financial group.
      - XorNot 11y ago
        Because, "capitalist" and "communist" are not two fundamentally opposed groups: go far enough in either direction, and you end up in the same place results-wise.
      - hluska 11y ago
        > I really do not understand how anybody with even a little understanding of the two countries can lump India and China together in the same political/financial group. Are you asking how the term 'BRIC' came about?? If so, the paper where the term was first used is available online and it is remarkably readable. The pdf is located: http://www.goldmansachs.com/our-thinking/archive/archive-pdfs/build-better-brics.pdf http://www.goldmansachs.com/our-thinking/archive/archive-pdf... There were at least two follow up reports that I'm sure are also available online.
        exelius 11y ago
        The BRIC (Brazil, Russia, India, China) countries are all grouped together because they all have very large populations (Russia is the smallest at 140 million) and rapidly modernizing economies. In other words, they're actually big enough to stand on their own on the global stage should their economies become fully developed. From the standpoint of an investment banker (which is where the term BRIC comes from) any differences between them are largely irrelevant - they all have a large population, a government that is stable enough to protect their business investments, and an improving distribution of wealth to ensure widening participation in the economy to sustain growth for decades (this is important when macro investing; a rising tide raises all ships, and macro investors are basically investing in all ships). But that's about where the similarities between these 4 countries end, so using the term "BRIC" to speak about cultural similarities is meaningless.
  - kbenson 11y ago
    I'm not sure how you think they are lumped together. That quote outlines how each specifically meets the criteria of being "less transparent and truthful" in the eyes of the author.
  - exelius 11y ago
    I don't know why you are getting downvoted; you're absolutely correct. Note that while the below sounds racist; I'm referring explicitly to the governments themselves. > There are challenges to investing in either China or India, but the reasons behind those challenges are about as different as you can get. The underlying issues in the two countries are dramatically different. I agree; and you probably know this all, so it's for others' benefit. China is a centrally-planned economy that has transitioned to a capitalist-style oligarchy. Culturally, they value society as a whole as being more important than the individual or individual groups. The Chinese government is still the ultimate authority, though many factions exist within the Communist party. Everything coming from the central Communist party is reviewed and OKed by a dozen officials to ensure a consistent story - so any bad numbers are a result of deliberate overstatement at some level. It also means that stakeholders at every level have the opportunity and incentive to falsify numbers (because missing your numbers means losing your job and ending up in poverty). It's not a giant conspiracy; but there is little downside to falsifying accounting numbers (which will get you a prison sentence in the US). India is on the opposite end of the spectrum - it's basically a free-for-all with a bunch of very different groups of people pushed together to try to make it work. There are thousands of ethnic groups, many of whom hate each other. So in order to keep the peace, they have to allow each ethnic group a wide berth. This means that when you say "the Indian government" you're talking about an entity that is a multi-headed hydra (or even multiple hydras). There are many competing desires and biases present in the Indian government, and it's politically difficult to deal with those problems when your population is as fragmented as India's is (and why the election of a more modern leader with a global focus like Modi was a huge step forward).
- psaintla 11y ago
  That's a pretty hilarious statement considering the lack of transparency is what led to our own market crash.
  - hueving 11y ago
    That was lack of transparency inside privately generated mortgage backed securities. The US crash wasn't caused by blatant lies about economic indicator (GDP numbers, etc). The transparency of the housing sales is actually what allowed people to see the contractions and prevent the issue from getting even worse.
    - psaintla 11y ago
      Transparency of housing sales isn't what allowed people to see the contractions and it certainly didn't keep the problem from getting worse. Massive numbers of defaults were the indicator. What kept the problem from getting worse was the government taking partial ownership of the major banks/AIG, increasing the FDIC limit and TARP.
    - irln 11y ago
      With the tech bubble/bust you could look at underlying companies for the canary in the coal mine. With the housing bubble/bust as you mention you could look at each mortgage and the ability of the borrower to pay. When you have a bubble arguably in government debt, what is the mechanism of transparency to look for?
      - psaintla 11y ago
        With the housing bubble there wasn't a good way to look at each mortgage or the borrowers ability to pay. In a lot of cases the mortgage data was falsified or didn't even exist. In the aftermath of the bust several banks could not produce any documentation on homes they wanted to foreclose on.
  - deleted 11y ago
    [deleted]

"india" is being lumped together just for namesake. I don't think indian market is any less transparent than US/Japan or others.

by tintri 11y ago

"india" is being lumped together just for namesake. I don't think indian market is any less transparent than US/Japan or others.

berberous 11y ago

Nevsky Capital, a successful hedge fund, just shut down and released an interesting letter to its investors that's worth reading in full. I'm not sure about the transparency of India's stock market, but it did not have nice things to say about the quality of their economic data: "Data releases have become much less transparent and truthful at both a macro and a micro level. At a macro level the key issue is the ever increasing importance of China and India. China is the world’s second largest economy, but already much larger than the US in a broad swathe of sectors. India will be the world’s third largest economy within a decade. Unfortunately their rise is increasing the global cost of capital because an ever growing share of the most important data they produce is simply not credible. Currently stated Chinese real GDP growth is 7.1% and India’s is 7.4%. Both are substantially over stated. This obfuscation and distortion of data, whether deliberate or inadvertent, makes it increasingly difficult to forecast macro and hence micro as well, for an ever growing share of our investment universe." http://www.businessinsider.com/nevsky-capital-closing-letter-2016-1 http://www.businessinsider.com/nevsky-capital-closing-letter...

chimeracoder 11y ago
It's really frustrating to see China and India constantly discussed as if they were a single unit, particularly when it comes to economics. Aside from the fact that they are (a) both very large, and (b) both rapidly developing countries/economies, China and India share very little in common. There are challenges to investing in either China or India, but the reasons behind those challenges are about as different as you can get. The underlying issues in the two countries are dramatically different.
- WalterSear 11y ago
  Perhaps you could tell us what those differences are?
  - dingo_bat 11y ago
    As I see it, India is a functioning democracy with a strong commitment to capitalistic industry. Regulation might be too much/too less in some areas but that will eventually improve. OTOH, China is very close to dictatorial, with the government controlling everything from the exchange rate to every company's policies. For example, we have proper public debates in India about stuff like net neutrality, freedom of the press, and we routinely criticize the government and politicians. That is simply not possible in China. I really do not understand how anybody with even a little understanding of the two countries can lump India and China together in the same political/financial group.
    - XorNot 11y ago
      Because, "capitalist" and "communist" are not two fundamentally opposed groups: go far enough in either direction, and you end up in the same place results-wise.
    - hluska 11y ago
      > I really do not understand how anybody with even a little understanding of the two countries can lump India and China together in the same political/financial group. Are you asking how the term 'BRIC' came about?? If so, the paper where the term was first used is available online and it is remarkably readable. The pdf is located: http://www.goldmansachs.com/our-thinking/archive/archive-pdfs/build-better-brics.pdf http://www.goldmansachs.com/our-thinking/archive/archive-pdf... There were at least two follow up reports that I'm sure are also available online.
      - exelius 11y ago
        The BRIC (Brazil, Russia, India, China) countries are all grouped together because they all have very large populations (Russia is the smallest at 140 million) and rapidly modernizing economies. In other words, they're actually big enough to stand on their own on the global stage should their economies become fully developed. From the standpoint of an investment banker (which is where the term BRIC comes from) any differences between them are largely irrelevant - they all have a large population, a government that is stable enough to protect their business investments, and an improving distribution of wealth to ensure widening participation in the economy to sustain growth for decades (this is important when macro investing; a rising tide raises all ships, and macro investors are basically investing in all ships). But that's about where the similarities between these 4 countries end, so using the term "BRIC" to speak about cultural similarities is meaningless.
- kbenson 11y ago
  I'm not sure how you think they are lumped together. That quote outlines how each specifically meets the criteria of being "less transparent and truthful" in the eyes of the author.
- exelius 11y ago
  I don't know why you are getting downvoted; you're absolutely correct. Note that while the below sounds racist; I'm referring explicitly to the governments themselves. > There are challenges to investing in either China or India, but the reasons behind those challenges are about as different as you can get. The underlying issues in the two countries are dramatically different. I agree; and you probably know this all, so it's for others' benefit. China is a centrally-planned economy that has transitioned to a capitalist-style oligarchy. Culturally, they value society as a whole as being more important than the individual or individual groups. The Chinese government is still the ultimate authority, though many factions exist within the Communist party. Everything coming from the central Communist party is reviewed and OKed by a dozen officials to ensure a consistent story - so any bad numbers are a result of deliberate overstatement at some level. It also means that stakeholders at every level have the opportunity and incentive to falsify numbers (because missing your numbers means losing your job and ending up in poverty). It's not a giant conspiracy; but there is little downside to falsifying accounting numbers (which will get you a prison sentence in the US). India is on the opposite end of the spectrum - it's basically a free-for-all with a bunch of very different groups of people pushed together to try to make it work. There are thousands of ethnic groups, many of whom hate each other. So in order to keep the peace, they have to allow each ethnic group a wide berth. This means that when you say "the Indian government" you're talking about an entity that is a multi-headed hydra (or even multiple hydras). There are many competing desires and biases present in the Indian government, and it's politically difficult to deal with those problems when your population is as fragmented as India's is (and why the election of a more modern leader with a global focus like Modi was a huge step forward).
psaintla 11y ago
That's a pretty hilarious statement considering the lack of transparency is what led to our own market crash.
- hueving 11y ago
  That was lack of transparency inside privately generated mortgage backed securities. The US crash wasn't caused by blatant lies about economic indicator (GDP numbers, etc). The transparency of the housing sales is actually what allowed people to see the contractions and prevent the issue from getting even worse.
  - psaintla 11y ago
    Transparency of housing sales isn't what allowed people to see the contractions and it certainly didn't keep the problem from getting worse. Massive numbers of defaults were the indicator. What kept the problem from getting worse was the government taking partial ownership of the major banks/AIG, increasing the FDIC limit and TARP.
  - irln 11y ago
    With the tech bubble/bust you could look at underlying companies for the canary in the coal mine. With the housing bubble/bust as you mention you could look at each mortgage and the ability of the borrower to pay. When you have a bubble arguably in government debt, what is the mechanism of transparency to look for?
    - psaintla 11y ago
      With the housing bubble there wasn't a good way to look at each mortgage or the borrowers ability to pay. In a lot of cases the mortgage data was falsified or didn't even exist. In the aftermath of the bust several banks could not produce any documentation on homes they wanted to foreclose on.
- deleted 11y ago
  [deleted]