Country/Economy Analysis - Fundamental Analysis -Topic 8

In top down approach, in global investing, first countries wherein investments will be made will be determined. Country/economic analysis is used for this purpose. No doubt to forecast financial variables for discounted cash flow analysis, one has to make analysis of the economy. But that is a long term forecast of the economy. In textbooks when economy analysis is discussed, the focus mainly is on short term conditions that help to take short-term investment decisions.

The Key Variables of Macroeconomy

1. Growth rate of gross domestic product

1. Growth rate of gross domestic product

GDP of India for 2021-22 = Nominal GDP or GDP at Current Prices in the year 2021-22 is estimated to attain a level of ₹ 236.65 lakh crore, as against ₹ 198.01 lakh crore in 2020-21, showing a growth rate of 19.5 percent.

https://pib.gov.in/PressReleasePage.aspx?PRID=1829784

The higher the growth rate of GDP, other things being equal, the more favorable it is for the stock market.

January 1971

Expectations, Money, and the Stock Market

by Michael W. Keran

In recent years, increasing attention has been given to analyzing influences of expectations and monetary actions on the course of economic activity. This article examines the response of time general level of stock market prices (measured by the quarterly average of the Standard and Poor’s 500 Daily Index) to these two influences.

Economic Research

 Research Division of the St. Louis Fed.

Referred to By Prasanna Chandra, in book Investment Analysis and Portfolio Management

https://research.stlouisfed.org/publications/review/1971/01/01/expectations-money-and-the-stock-market/

https://www.icicidirect.com/knowledge-center/learn-hub/equity/chapter-10-economics-for-stock-market32

http://ijrmbs.com/vol6issue3/emmanuel2.pdf

India - Economic Analysis

https://economictimes.indiatimes.com/markets/stocks/news/budget-sets-path-for-investment-led-growth/articleshow/89341285.cms

https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/portfolio-insights/ltcma/ltcma-full-report.pdf

https://www2.deloitte.com/us/en/insights/economy/asia-pacific/india-economic-outlook.html

https://www.thecasecentre.org/products/view?id=153551

https://pib.gov.in/PressReleasePage.aspx?PRID=1793826

https://www.india.gov.in/spotlight/union-budget-fy-2022-2023

https://www.bcg.com/india-economic-monitor

https://www.focus-economics.com/countries/india

https://www.goodreturns.in/personal-finance/investment/these-9-sectors-in-india-are-expected-to-boom-in-2022-1235395.html

https://www.hdfcsec.com/budget2022withhdfcsec

USA - Economic Analysis

16 June 2022

United States Economic Forecast Q2 2022

The forecast examines the possibility of a recession hitting the US economy as the country continues to wade through disruptions caused by the war, COVID-19, and supply chain crisis.

Daniel Bachman

United States

https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis.html

https://www.swissre.com/institute/research/sigma-research/Economic-Outlook/us-economic-outlook-june-2022.html

World Economy

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/economic-conditions-outlook-2022

https://www.fitchratings.com/research/sovereigns/global-economic-outlook-june-2022-13-06-2022

J.P. Morgan - 2022 Long-Term Capital Market Assumptions Full Report 

Our own multi-asset investment approach relies heavily on our LTCMAs: The assumptions form a critical foundation of our framework for designing portfolios. 

https://am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/portfolio-insights/ltcma/ltcma-full-report.pdf

Ud 24.8.2022,  1.7.2022

Pub. 18.12.2007

Understanding US Economic Indicators

Goldman Sach's 2008 report

Consumer Confidence Index USA

Economic Times 2 Feb 2007 Page 19

Consumer confidence index climbed to a two and half years high. The index clocked 103according to RBC Cash Index. That was up from a 95.3 in january and was the best since Sep 2004. The index is based on the results of the international polling firm Ipsos.
----------------

India Can Grow at 10% for a Decade

Lehman Brothers Report October 2007

.India could grow at 10% or so per annum over the coming decade.


. This judgement is contingent on India continuing to actively pursue structural economic reforms.


. Structural changes behind India’s growth acceleration, contributing to capital deepening and rising productivity. They include the development of the financial system, trade and capital account liberalisation, and more prudent macro management.


. India has reached “take-off” stage.

. There is clear evidence that India’s rapid economic development, high growth and
reforms have started to interact positively with each other – the economy appears to
be taking on many of the characteristics exhibited by other large Asian economies during the early stages of economic take-off.

• While business continues to prove impressively adept at working round systemic
and structural challenges, sustaining higher growth in the medium term will require
continuing structural reform.

. further financial sector reforms could add 1 to 1½ percentage points to India’s long-term GDP growth.

• Even larger economic gains could flow from removing constraints such as weak
(soft and hard) infrastructure, bureaucracy, and labour market rigidities. Breaking
down these barriers is key to enabling business to achieve increasing returns to scale by capitalising on its global comparative advantages in labour-intensive
manufactured and agricultural exports.

. India’s trade-to-GDP ratio could double over the coming decade, also adding 1½ points to GDP growth.

• However, pushing through structural reform will remain a political challenge in the
face of headwinds from vested interest and coalition politics. That said, there should be a new window for reform after the next general election due in 2009.

• Given the powerful trends of demography and urbanisation, India needs “a faster
and a more inclusive” growth strategy to correct its inter- and intra-regional
imbalances and avoid social unrest. The social and economic costs of not pursuing
inclusive growth are potentially enormous.

• Inclusive growth can be facilitated by further easing the shackles on business, by
making education and health available to all of society and by developing the rural
sector, which employs nearly 60% of the total workforce. Labour market reforms to
spur the necessary job creation over the next decade will be a key challenge.

• India’s growing economic clout is encouraging a more proactive regional policy and
greater engagement on the global stage, for example in trade liberalisation and the
climate change debate, which also stand to boost economic growth.

• In short, in India there is still much growth potential to be unlocked.


For full report - download from

www.lehman.com/who/intcapital/pdf/IndiaReport.pdf