The purpose of this essay is to elaborate on the theme of this blog. Private investors in India are concerned with the performance of stock market indices and the profitability of investments in particular sectors of the Indian economy. These barometers are affected significantly by geo economic and geo political developments which exercise what is largely an influence that is in my opinion under-appreciated by domestic investors.
A full fledged geoeconomic war is raging, a war in which few sovereigns and regions have the choice of an insulated neutrality, in my opinion. My view is that the decisions and actions of most policy making organizations constitute an effort to strike a balance amongst various interests, rather than a tendency to focus on a more general nationalism that is symbolized by these entities.
The oil and gas industry is one of the focus areas of this blog. The process of exploration, extraction and distribution of petroleum and petroleum gas products involves several significant policy interactions. Given the scale and economic importance of these activities, these interactions constitute what should be understood essentially as being amongst large rival commercial organizations operating in this sector. Oil companies however, can exercise a competitive influence on policies of a particular sovereign versus those of another; and influence that also acts in different directions on the policies of a particular sovereign.
Competition in this sector appears to have recently intensified to the respective financial sector backers. Those institutions exercise influence on the availability of credit; and therefore on the monetary policies of independent central banks; and the fiscal policies of sovereigns. Study of the ownership (and significant rapid changes in ownership); of financial institutions in different geographies is therefore reflective of geopolitical influences at cross purposes.
The competitive dynamics in the oil and gas industry has also broken out in more visible political events: such as regime changes, and, more recently, medium intensity military conflicts involving sovereigns and militant groups.
The overarching objective of analyzing information along these dimensions is to predict the likelihood of resolution of these conflicts. While there is a natural tendency to favor the limitation of collateral damage; for instance, in the form of widespread unemployment, or vicitimization of unarmed civilians in armed violence; that predisposition does not entail any political, nationalist, religious or other ideological affiliation for this author.
It follows that the resolution of these conflicts augurs very well for the performance of the stock market barometers, though limiting the collateral damage has much more humanitarian significance than the improvement of the stock market barometers.
It is also true that we should expect the markets to look ahead towards a particular resolution rather than wait on it to actually occur, and I hope this blog will contribute to the market participants' efforts to look ahead.
Interesting readings - *Bonds markets are not different* on Jayanth Varma's blog, 18 September 2017. How we achieve this in India. *Jaypee: consumer angle in IBC play* by Aparna...
22 hours ago