Charts of the Month for February 2024

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5^th February 2024 – Narrowing Current Account Deficit of India

Source: CEIC, MUFG GMR as on 31^st December, 2023

1. India’s current account deficit (CAD) narrowed to $8.3 billion in the second quarter of 2023-24 and accounted for 1% of India’s GDP. In the second quarter of 2022-23, the deficit stood at a huge $30.9 billion and accounted for 3.8% of GDP.
2. Remarkable improvements in both merchandise and services exports has led to the narrowing of current account deficit. Inflows from foreign remittances, FDIs, FPIs and softening of commodity prices has also helped in reducing deficit.
3. After widening of deficit in October, 2023 because festival demand led to sharp increase in imports of gold and silver, the deficit has again lowered in November 2023.

12^th February 2024 – Diverging trajectories of two major Asian powers

Source: NSE & Yahoo Finance, as of 31^st January, 2024

1. Over the past year, the trajectories of the Indian and Chinese markets have diverged significantly.. The blue-chip CSI 300 index saw a substantial decline of 23%, while the Nifty 500, in contrast, showed a remarkable growth of 33%.
2. Foreign investors’ confidence in China is eroding due to escalating tensions with the US. Additionally, the property sector, representing around 30% of the country’s GDP, is facing significant challenges, putting strain on the banking system.
3. Global markets are now shifting focus towards India, being the most attractive emerging market. In Q4 2023, the leading U.S. ETF investing in Indian stocks saw record inflows, while the top four China funds experienced combined outflows nearing $800 million. Furthermore, in January 2024, India briefly overtook Hong Kong to become the world’s fourth-largest equity market.

19^th February 2024 – Japan surrenders world’s third biggest economy status to Germany

Source: Japan Cabinet, as of 15^th February, 2024

1. Japan slipped to the world’s fourth largest economy as its GDP stood at $4.2 trillion in 2023, dropping below Germany’s $4.5 trillion. Furthermore, the GDP of India, being the fifth largest economy, stood at $3.7 trillion.
2. Japan’s GDP shrank 0.4% annually in October-December period, following a 2.9% contraction in the previous quarter. Thus, marking two consecutive quarters of decline in GDP.
3. Contraction in both private consumption and capital expenditure for the third consecutive quarter may have led to the decline in Japan’s GDP.

26^th February 2024 – Comparative valuations of major indices of the world

Source: Bloomberg, as of 21^st February, 2024

1. Nikkei stands out with the highest valuation among its global counterparts, followed by the Nifty 50. However, UK & Chinese indices has comparatively lower valuations.
2. Robust corporate earnings, attractive valuations and strong reforms has driven investors’ confidence back in Japan.
3. While Nikkei 225 excelled with a 15% year-to-date return, MSCI China struggled with a -3.3% performance. Nifty 50 also remained flat and generated 1.5% return.

Disclaimer: The above views alone are not sufficient and should not be used for implementation of an investment strategy. All opinions, figures are subject to change without notice. The above is for illustration purposes only and should not be construed as an investment advice to any party. Past performances may or may not be sustained in the future.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.