Bank layoffs in china inconsequential to property in mumbai ppt

Bank Layoffs in China Inconsequential to Property in Mumbai

Mumbai’s stock market and property in Mumbai need to pay heed to events unfolding in China today as thousands of employees of state-owned banks are being sacked from their positions. That there are a large number of non-performing assets on the balance sheets of many of the largest banks in China has been known for nearly a decade. The question global investors have to ask themselves now is whether the steps being untaken

by Chinese banks is sufficient to lower costs and prevent any greater calamity from unfolding. A decade ago soothsayers from western countries had proclaimed grave trouble in China and that a systemic banking crisis was on the horizon in the then third largest economy in the world. Instead what happened was the opposite with the popping of the subprime asset bubble in the US and the European debt crisis which today threatens the future of the Euro. It may be too early to say whether the cost cutting measures in China today are sufficient to stave off another financial crisis in the world, a crisis which takes root in china would invariably spread to Mumbai and impact real estate in Mumbai as well as the Sensex.

Most smart investors know better than to be swayed by bold headlines which claim to foretell doom. The Chinese leadership is among the ablest in the world and has on two occasions in the past shown they are capable of handling even the most severe crisis as was displayed in the summer of 2015 and in January of this year. As financial markets are global, any adverse impact on Chinese banks will reverberate around the globe, most likely in such a scenario investor in Mumbai would sell short leading the stock market to fall.

Builders in Mumbai who rely on a steady stream of buyers from among the middle-income segment may be impacted by trouble in Chinese banks as many businesses in India rely upon Chinese businesses and the Chinese footprint in India is increasing daily. As a matter of fact, the impact of financial trouble in China would be felt in India but it is very likely to be a temporary slump and markets in India would recoup a few days’ losses within a relatively short period of time such has been seen in the past.

Over the past few years, many investors believe they have acquired a keen sense which they believe foretells unexpected events and thus many overreact to headlines which they sense augurs momentous changes ahead. While every such headline is often seen indicative of great turbulence ahead this may, in fact, be a self-feeding mechanism where news publishers headline news stories which they believe shall be catchy and which have in the past had a large readership. Arun Jaitley had spoken a few months ago at a press conference stating that “financial crises once happened one every five years but today there is a new one every week�. Perhaps he is himself expecting something from out of the blue, likely an important event which catches him and nearly everyone else off guard. Or perhaps the media and press are simply doling out news stories likely to fit with an already accepted narrative.

Builders with upcoming projects in Mumbai need not worry about any oncoming calamity which would render them penniless.

It’s likely that most apartments in Mumbai and the city’s stock market will be valued at significantly higher premiums this time next year.

There is almost no need to sell one’s luxury apartment in Mumbai and to head for the hills or to become a prepper as many Americans expecting the worse are doing today.

The global economy is simply entering a disruptive phase where a greater share of output is accruing to service related industries rather than to services related to manufacturing and agriculture. Such a transition is bound to have birth pangs but will over time lead to greater wealth and equality for all. This is the correct narrative and the one to be wisely heeded.