MC BS or ET???

 If you do not get the title, then this write-up is probably not for you. Wrote in June-2021.

So last year I bought Moneycontrol.com subscription. I use it extensively. Moneycontrol.com was my go to site for news, portfolio tracking as well as stock research. My overall experience after a year of use is as follows.

Pros:-

1.       While tracking Equities, MF even FDs, Moneycontrol is

a.       Easy make portfolio, can even import data.

b.      Quick to add, edit, delete & view investment

c.       All info is readily available at a quick glance.

2.       For stock research

a.       Historical Data downloadable in Excel

b.      Visual representation of Share holding pattern, profit, sales are available.

c.       All information available one below the other, so accessing it, is a matter of scrolling

3.       News

a.       Daily news before market opening.

b.      Moneycontrol Pro Panorama news letter

c.       Daily technical recommendation.

4.       Others

a.       Moneycontrol subscription also came with an optional subscription to various technical and fundamental analysis.

 Cons:-

1.       News on Moneycontrol are not fewer than what available for free on other platforms like ET and Business Standard. Even after partnership with Financial Express, where you get articles from Fe, there wasn’t much of an improvement.

2.       Monecontrol Pro newsletter needs serious upgradation. That newsletter is dispatched on ‘one size fit for all’ methodology. It is just top 5 news with a paragraph of running commentary.

3.       Regarding research data, I think BSEInida.com offers a similar experience and for free. In some cases, I will rate BSEIndia higher than Monecontrol because of minimalistic graph and bar use. Rather than having graphical element in each and every aspect like Moneycontrol, BSEIndia keeps it restricted to numbers only.

4.       Also sometimes I found, when you need access to company’s result filling data, it is not available on Moneycontrol site. But BSEIndia gives separate links to Standalone and Consolidated results filling.

5.       Broker research which is available on google search sometimes does not appear in Moneycontrol sites.

Hence I finally decided to move on to a new site. Below is a price comparison of top Business newspapers of India.

1.       Financial Express does not have any paid subscription. At least I do not find it on their website. Also, I could not find portfolio or stock research tabs.

2.       Same thing with Mint. I do not think even with WSJ subscription Mint justifies price higher than ET.

3.       The Hindu Business Line seems beneficial only if bought along with other Hindu Group publications. Standalone I do not see any value to it.

4.       Finally, we come down to the usual suspects. I feel, Business Standard with 12 months free on 1 year subscription, is great value for money proposition.

5.       The 3 things that encourage me to go for ET are as follows

a.       Extensive stock report of 11 pages detailing projected turnover, technical score, and all the stuff. As research was one of the reasons I wanted the subscription I found those reports very helpful. One sample report is available for reading. ET also provides reports on a daily (technical) and weekly basis. They claim the
value of such reports is worth Rs. 1,499/-

b.      Additional subscription to OcuBay a documentary platform and Times Prime an entertainment platform.

c.       I, out of curiosity, checked ET app and found 20% discount. Which brought ET Rs. 2,000 pa.a. only Rs. 200/- more than Business Standard. Even though Business Standard is running 12+12 scheme I thought ET would be more than beneficial.

Hence I chose ET subscription.

Should China be part of BRCIS?

1. BRICS as envisioned

In 2001, Chief Economist of Goldman Sachs Jim O’Neil coined a term BRIC. Four emerging economies on world map from Left to Right, Brazil Russia India & China. Latter South Africa was added to the list. All these countries were emerging economies, with large population. They also have large land mass available for expansion.

BRICS countries are very different — both in terms of their resources and in terms of their values and goals. The only thing they all have in common is, well, membership of BRICS. Brazil and India are democratic, China and Russia are not. Brazil and Russia export hydrocarbons, China and India are net importers. China and Russia are permanent members of the UN Security Council – the others are not. Structure of financial systems, levels of income, education, inequality, health challenges also differ substantially within BRICS. This is why it is very hard to speak with a unified voice and to co-ordinate action. The fact that BRICS have not really established anything tangible yet should not be a disappointment .

Even though BRIC was propose 2001 it remain as dormant idea till 2009. Most multi-lateral institutions were designed in the era when the West dominated the world. The US and Europe are over-represented in the IMF and the World Bank. Together with Japan, they control most regional development banks as well. But the Sub Prime crisis of United States in 2007-08 made G7 to realize that Global financial power has shifted, and broader participation from non OECD countries is must if they wanted to save global economy.

In this backdrop first BRIC summit happened in 2009 and South Africa joined next year in 2010. Also at the same time G20 was also rejuvenated which includes the BRICS nations.

2. Comparison of BRICS nations

Since 2009 every BRICS nations has progressed differently. Which you can see from the chart below. 

  

Since 2014 Russia and Brazil start to decline while India started rising up. But this would not be visible if you include China into the mix as depicted in chart below.

 

As you can see China was always stand out candidate in BRICS since it’s inception. In 2009 Chinese

economy was more than all the other BRICS nations combined. China in 2009 stood at 5088 Billion USD against all other BRICS were 4693 Billion USD. Today China alone is twice of all BRICS economies. China in 2019 is 14731 Billion USD and all other BRICS are 6760 Billion USD. 

3. Chinese dominance in world trade negotiations.

China is unusual fit in this group. China being member of BRICS might be justifiable 2 decades ago but now it is becoming more and more evident that China is becoming a nuisance to the cause of BRICS.

BRICS was formed with the view to face challenges collectively as a block of developing nations. Especially during the beginning of last decade Develop nations started putting environmental restrictions on developing nations and industries. But as we see in recent times, China has struck deal individually with US and EU. This has left other 4 BRICS nations at a disadvantage. Because, now the EU has an option if things doesn’t work out with any of the BRICS nation they can continue to work with China.

Chinese dominance in world trade make them immune to certain environmental restrictions. But that immunity is not available to Brazil, Russia Indian and South Africa. They get bitter end of the bargain. China rather than adding value to the collective taking advantage of the poor/emerging economy status.

4. Challenges for BRIS

Without China the BRIS would have mere 7% of world GDP. But excluding China BRIS has many more things in common to work together. All 4 BRIS nations has massive landmass. South Africa is 24th Largest while other 3 comes in top 10. They have humongous natural resources to be exploited, which are favourite target of environmentalist. They have too much to gain working together and too little to lose. Staying together is their biggest challenge.

While China has ongoing border disputes with Russia and India no BRIS nation shares a common border. That put strategic pressure at ease while discussing economic issues. Such thing could not be imagined between India and China. Just recently India has banned 100+ Chinese apps and designated them security risk. There is no such conflict of security interest among BRIS. In few cases they can complement each other. Brazil and Russia are net exporter of Hydrocarbon while India and South Africa are importer. India has largest IT and Pharma industry which can satisfy need of all BRIS nations. 

More so countries like Bangladesh, Indonesia, Argentina and Mexico has expressed strong interest in joining BRICS. Bangladesh was invited in 2020 summit.

It would be feasible to achieve goals only if economies with similar strength are grouped together. With China the balance is unfairly tilted.

It would be advantageous if China replaced with few other emerging economies.

World Debt Crisis

 Let me accept in the very beginning that I am no economic expert. All I am doing is point out to the data points based on past events.

These are the top 19 countries controlling world’s 80 % of GDP. These are the countries which matter to our progress. Value of our money is derived from the functioning of these economies.

Sr. No.	Name	GDP in Trillion	Percent
1	United States	20.807269	24.92
2	China	14.860775	17.80
3	Japan	4.91058	5.88
4	Germany	3.780553	4.53
5	United Kingdom	2.638296	3.16
6	India	2.592583	3.11
7	France	2.551451	3.06
8	Italy	1.848222	2.21
9	Canada	1.600264	1.92
10	South Korea	1.586786	1.90
11	Russia	1.464078	1.75
12	Brazil	1.363767	1.63
13	Australia	1.334688	1.60
14	Spain	1.247464	1.49
15	Indonesia	1.088768	1.30
16	Mexico	1.040372	1.25
17	Netherlands	0.886339	1.06
18	Switzerland	0.707868	0.85
19	Saudi Arabia	0.680897	0.82

 

Out of the above following are the 9 countries to which 80% of the world debt is owed.

Sr. No.	Name	Debt In Trillion	Percent
1	United States	21.465	32.42937
3	Japan	11.788	17.80933676
2	China	6.764	10.21906632
8	Italy	2.744	4.145641336
7	France	2.736	4.133554918
5	United Kingdom	2.455	3.709019489
4	Germany	2.438	3.683335851
6	India	1.851	2.796494939
12	Brazil	1.642	2.480737271

 

Out of the above following are the 5 countries having Debt to GDP ratio more than 100%

GDP is total good and services you produce in the country in a year. Debts are even though a long term obligation to be paid over the years is always compared to GDP.

Sr. No.	Name	GDP in Trillion	Debt in Trillion	Debt to GDP
3	Japan	4.91058	11.788	240.0531
8	Italy	1.848222	2.744	148.467
12	Brazil	1.363767	1.642	120.4018
7	France	2.551451	2.736	107.2331
1	United States	20.807269	21.465	103.1611

 

Even though Venezuela, Greece, Portugal also has more than 100% debt to GDP their economies are not large enough to have ramifications for the entire world. Sure their financial crisis will have ripples on world banking and economic environment, but world can come out of it.

For the above mentioned 5 countries even if they perform at their usual efficiency they won’t be able to pay debt out of good manufactured and services produced in one year. Such countries can borrow today and transfer the obligation tomorrow. This is called debt trap where you keeping borrowing money to pay current debt. In turn your debt kept on increasing. Such debt eventually has to be paid.

The figures are pre-covid. You can expect drop in GDP numbers across the world. This is alarming situation. The financial world runs on trust. That debt will be served on time. And if some country default on payment the trust is broken. There have been instances of default. Such countries are punished severely by charging higher interest rates. But because those economies were small and their debt were insignificant banks could bare defaults.

The 5 countries listed above are major part of world economy. Default on their part will devastating for world economy. Entire world can go into recession.

Since last 6 months US 10 year benchmark Bond Yield has already increased .8%. In simple words it means US 10 Year bonds are getting cheaper. Bankers are selling them.

This is too early to call but if the trend continues, US might see a serious demand problem. World economy is dependent on US demand. If that fell, entire world can go into recession. Apart from USofA Japan, Italy, Brazil and France are also the economies we need to closely watch for.