After gaining 50% last year, the market gave up this gain in the first quarter. The stock market is now selling at a P/E of 5 and a dividend yield of 7%. Russian equities suffered from the oil war with Saudi Arabia that started in March in addition to the fast deteriorating investor corona effect. OPEC tried to resolve the sharp drop in demand for oil but were only able to gut around 10% of the estimated 30% reduced demand for oil. The rouble weakened almost 30% during the quarter Russia has a mild covid-19 report vs other countries and Russia benefitting from its widespread population and work places that are isolated like mines, oil and manufacturing.
India is one of the largest oil importers so the current oil collapse is like a gift from above.
India had its worst month in the stock market since October 2008. The government decided to lock-down 25th March to lock down the entire nation of 1.35 billion people for an initial period of three weeks where all trains and flights have been cancelled, buses and taxis have been taken off the road and travel outside the home is prohibited except to access cover basic needs. India quickly announced a fiscal package worth 0.8% of the GDP to help low-income households from the lockdown by using the strategic grain reserve, free cooking gas and direct money transfers and cut the interest rate by 75 basis points. In March, foreigners pulled out nearly $8 billion from the equity markets while domestic investors put $7 billion into the equity market.
China outperformed other emerging markets during the quarter as the government took drastic measures to stop the covid-19 from spreading and reopened its economy as other countries started to get infected. Factories resumed operations back to 80-90% of pre-virus levels. Retail sales also recovered to between 50% and 80%, depending on the nature of the spending. Despite reopening of factories and resuming social activities, the global economic slowdown will result in weaker orders. Therefore, China initiated various relief programs like increasing the general fiscal deficit, issuing special Treasury bonds and granting local governments more special bond quotas.
The economy dropped 6.8% for the quarter, the worst contraction in four decades due to lockdown effects.
Domicile: Malta
Source: Bloomberg