This has been a pretty hectic month for global markets. At the last count, three major banks in the US and one of globally significant ones- Credit Suisse have gone bankrupt or sold at pittance to its national rivals. Let’s deal with this one by one!
The SVB collapse is a stark reminder of the global financial crisis circa 2008 when banks and financial institutions collapsed while enabling maids and strippers to purchase mansions in Florida ( no am not making this up, Strippers did buy mansions. Go read the Big Short by Michael Lewis). It is eerily similar because, and am borrowing a quote from Shankar Sharma that this startup lending is subprime by its very nature. On the other hand, Credit Suisse going under came as a surprise but not shock to anybody following its share price in the past one or two years. At the last close, before it was sold at 75 cents a share, it’s market cap was just around equal to that of Canara Bank while it was bought at half the current market cap of Yes Bank! So much for global dominance and sound banking principles.
Currently, UBS, its savior has a market capitalisation less than that of ICICI Bank! The bigger thing is not market capitalisation but resilience of the Indian Banking industry in the face of global carnage. It is a matter of great pride and joy that our economy and banks are in absolute fine shape while the erstwhile global giants are collapsing like house of cards. It is also a testimony of our greater national economic resilience that while all major countries are staring at a recession, India is booming. Lamborghini is sold out for the next one year, Mercedes and Jaguars have have a waiting period beyond a year, Hotels have seen bumper occupancy at almost three times the usual prices and almost everything from iPhones to luxury watches are selling like hotcakes in India. So much for a falling GDP growth!
Look around folks, India is experiencing a monumental leap which is almost tectonic in magnitude . Over the next ten years, we’ll grow from $3 Trillion to almost $8-10Trillion and the way we see ourselves will change. This will be reflected in absolute world-class infrastructure, excellent hospitality industry and an India which is prosperous and aware of its role as the global rule setter.
Just see the change we have gone through. We now complain of a patch in a newly constructed highway being flooded whereas twenty years ago the road was no more than a single lane patchwork. I recently drove from Jaipur to Jodhpur, end to end in less than 5 hours including traffic( 350KM) whereas it used to take no less than 8 hours just a few years back. The roads and airports are now at par with the best in the world and any gora trying to tell you that India is an emerging economy must be smoking hash! We have the best payment and settlement systems in the world and the world is trying desperately to copy the UPI phenomenon. If it takes more than 5 minutes to open a broker’s account, I’ll be perplexed whereas the Germans still line up and wait for two weeks filling copious paperwork. The world is actually backward when it comes to digitisation and financial services. The Japanese are still figuring out mobile wallets while we’re going to international UPI.
One more thing, our hotels, even in tier two cities offer far more fine experience than one can imagine in even places like Dubai while Europeans still can’t figure out losing luggage in conveyor belts. This is our hallmark- hospitality. The world is also experiencing a new Indian traveler- richer and demanding. I don’t want to eat bland boring stupid pancakes and cupcakes because I want my laal maans and if you can’t provide it, you don’t get my money. The world will and is taking notice and the power of the Indian passport is rising. If you want me to visit your slowing economies because your people desperately want to sell high-end bags and watches which your people can’t afford anymore, be respectful of my identity. If you go around allowing Khalistanis to disrespect my flag, you lose my money Sunak! I’ve personally made a thumb rule that I’ll never travel to a country which doesn’t allow e-visa to Indians. As an Indian, a citizen of this extraordinary country facing its true tryst with destiny, I can be absolutely insistent on being on the Big Boys table.
So coming back to markets. This Credit Suisse, now Debit Suisse was pretty fast in not accepting Adani bonds as collateral. In one month, Adani has prepaid over $3-5 Billion of bonds while in Credit Suisse’s $17 Billion bonds are now worthless and it is bankrupt. Wake up Europeans, smell the coffee! India produces the best in the world btw!
Most importantly, I believe we’re somewhere in early 2009. This is when Lehman and AIG and the likes were dead or bailed out and the markets enjoyed a decade long bull run. We’ve gone through enough time correction where people have written off equity. This, as history tells us, is the time to be bullish left and right. I personally am always 110% invested so I’ve a vested interest in being so!
If you have read me this far, invest on India. Be bullish on this beautiful Country of ours which will be one of the most prosperous places on this planet in the next one generation. The naysayers will earn brownie points but you can earn a Billion.
Life is all about Compounding! 