- Interest rates are very low in developed markets.
- Big companies are making more profits and getting bigger.
- The stock market has an idea of the country’s economy.
Share Market (Stock Market) Veteran Investors Nilesh Shah It has said that the reason for the economic growth at this time around the world is the expansion of debt. Debt levels in developed markets have been increasing steadily since 2008. During the same period, credit growth in emerging economies slowed down from their peak levels. As a whole, developed markets are getting 3 times more debt than emerging economies.
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more debt in developed countries
Nilesh Shah has said that interest burden is less in developed markets while debt burden is high in emerging markets. Due to the borrowing of 3 times more in developed markets, their debt and the debt level of emerging economy countries has gone up to 1. This is because interest rates are very low in developed markets. This helps developed countries to easily raise capital to support their economy.
getting bigger and bigger
Due to this their fiscal deficit also increases, but due to this there is more expansion of money in developed markets and inflation associated with the price of assets. Developed markets also ensure the system of printing notes to increase their demand. That’s why the S&P 500’s operating margin in the US has hit an all-time high. One thing is being seen in the economy of the world at this time that what is big is getting bigger.
In many economies of the world, it is seen that big companies are earning more profits and are becoming bigger. This could be because large companies are able to use the current cycle of the economy to grow their business further, with more cash with them. If we talk about the international economy, the market cap to GDP ratio has reached 131%. This is the highest in the last few years. Due to the boom in the stock market, now equity issues have also increased. The number of new issues has increased significantly compared to the dot com era of 2000.
Relief from decreasing corona cases
If we talk about the domestic stock market, then the reason for the rise in India’s stock market is the decrease in the cases of coronavirus. The number of daily cases of coronavirus in the country has gone below 50,000. Along with this, the number of active cases is also decreasing in many areas. There is a massive vaccination campaign going on in the country and due to this too, optimism has increased in the stock market.
The stock market has an idea
The stock market has an idea of the country’s economy. Only time will tell whether the market is insensitive, a bubble is forming in the market that is about to burst or the market is discounting future GDP growth. Nilesh Shah feels he will keep his investments. He said, “The market it is, it knows everything. This means that the market moves forward by assessing and adjusting every possible risk.”
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