India – Stretched sentiment shrinking liquidity

Indian Equities have been recepient of both local ( MF inflows) and global ETF liquidity.India dedicated ETF have been one of the largest recepient of this liquidity( refer to the chart).  Global liquidity has been deteriorating for last 1 month and if MF inflows continue unabated then we might see markets atleast stalling and catching its breath for some time .

Variant Perceptions writes that “Liquidity conditions have deteriorated meaningfully for EM equities. The left chart below shows that the steep drop in G7 Excess Liquidity points to a risk of much lower EM equity prices in about 3-4 months’ time.This materially worse backdrop for EM equities is happening just when investors are piling into EM assets. If we look at the chart on the right, we can see that EM bonds and equities are seeing the largest ETF inflows over the last three months. Although, we are selectively positive on some specific EM markets (such as Malaysia), overall we believe investors should rotate away from broad EM equities exposure”.

Should You Go All In On Water Like Michael Burry?

Water investments? Michael Burry was one of the first institutional investors to bet against the US subprime mortgage market in the mid-2000s, and today he’s concentrating all of his investment efforts on one commodity: water. Burry’s focus on water has attracted plenty of attention to the commodity in the investment community but trying to profit Read More


https://blog.variantperception.com/2017/05/12/stretched-sentiment-leaves-em-vulnerable/