Contributed by: Navneet Munot CFA, Director IAIP and CIO SBI MF
Like every year, there were several contenders.
2014 is the silver jubilee year of the fall of Berlin wall. This year, we saw the US and Cuba coming closer. Compared to our history, present times might be termed as the most peaceful time ever. Online war games may be popular, but mankind is surely less violent now than previous generations. Yes, there are reasons to cheer but several to be cautious. Meltdown in oil and ruble haven’t yet drowned the ambitions of Russia’s Vladimir Putin. He is a smart Judo player and unpredictable. The volcanic rise of Islamic State (ISIS) will go down as the worst intelligence failure since the attack on Pearl Harbor in 1930s. The world is under-estimating their network, influence and ambitions. I worry about regimes like Venezuela, Nigeria, Iran, Syria and Sudan where sinking oil revenues may create severe disruptions. One needs to watch developments in Saudi Arabia.
Sights of thousands of refugees fleeing their African homeland, shooting down of Malaysian airline’s MH17 and the Sydney siege scare me. The hacking following Sony pictures’ “The interview” exposes new dangers of cyber warfare. We cheered Pakistan’s Malala Yousafzai and India’s Kailash Satyarthi on winning Nobel peace prize for children’s cause but the blood in Peshawar has stained humanity’s soul that no tears can wipe off. Fragility lurks beneath the veneer of a calm world. It is 100 years since the first gunshots of the First World War were fired. Hope we learn the right lessons from history and the global leadership rises to the occasion.
In a world devoid of strong leaders, Narendra Modi stands tall. He was a rock star in US and Australia and got the UN agree on a “World Yoga day”. He played drums in Kyoto and charmed the Japanese while getting Russian and Chinese Premiers savor Gujarati dishes here. Marketers have much to learn from “Abki Baar, Modi Sarkar” campaign and his smart use of radio, social media and technology. A broom now reminds of ‘Clean India movement’ and not the Aam Admi party (AAP). They say, stars have aligned for him. I say, destiny favors the determined.
BJP and winds of change swept the states of Haryana, Maharashtra and Jharkhand. State chief ministers are competing for investments and their reforms for “make in my state” would lead to success of “make in India”. I salute the people of J&K for bravely combating Nature’s fury and for fighting bullets with ballots.
Could it be the judicial activism? We saw the mightiest of politicians and businessmen go behind the bars. Courts may not get back India’s black money stashed abroad but they have ensured days of milking money from black gold (coal) are over.
Referendums in Crimea, Scotland and Switzerland were interesting. Scots decided to remain “better together” with UK. The Swiss thumbed down a proposal that Gold should form at least 20% of SNB’s assets. Investors should look at precious metals again to hedge global left tail risks. Yes, despite the strong dollar and weaker commodities.
The commodity “super-cycle” is ending as witnessed in prices of crude Oil to milk products, iron ore to thermal coal, cotton to copper, sugar to grains. Whether its terms of trade or political power structure, flow of savings or investments, fall in commodity will alter the world structurally. Countries joined by a simplistic acronym BRICS would be impacted so differently. The “turn of tables in the commodities market” was a strong contender.
Chinese government is dealing decisively with issues of corruption, pollution, property bubble and shadow banking. Global investors are worried about risks like protests in Hong Kong but buoyed by rate cuts, retail investors truly looked like “bulls in a china shop” pushing the Shanghai index 40% higher. In their “year of Horse”, Alibaba made giant strides and the Jack (Ma) of all things e-commerce is a master contender.
I thought of US Dollar as the mighty greenback rocked this year. We entered a period of divergent central bank policies. Abe’s Japan unleashed a liquidity bazooka and ECB is concocting a QE arsenal while US Fed is on a path of policy normalization. It’s early days yet. My fear is that central banks have become slaves to the diktats of financial markets while real economies are not responding in the desired manner. No wonder, the debate on inequality is gaining lot of “capital in the 21st century”.
The mantle for reviving growth and creating jobs has to be taken over by the fiscal policies as central banks can’t be “the only game in town”. Take my word, there is no other way out. We will all be Keynesians again.
I admire “Bond king” Bill Gross for starting afresh at Janus fund at the age of 70. Those passionate about managing money can be cut off from oxygen but not from the adrenaline that markets provide.
The fall in inflation in India was matched only by the downslide in congress party’s fortune this year. Indeed, calls for rate cuts are always inflated in India. Everyone proposed but Rajan disposed. He knows the importance of anchoring inflationary expectations, positive real rates and fire-proofing our house to deal with a world that has potential “Fault lines”. We can’t afford going through another “taper tantrum” like 2013. He has to ensure India’s banking system doesn’t become the Achilles heel in an economy ready for the recovery. He is steering us at a time when powerful forces of digitization and disintermediation are likely to change the landscape of banking and finance globally. Foreigners maintained the faith while domestic investors are returning to our financial markets. Governor Rajan was one of the strongest contenders.
We love our “Anand” but in the world of chess, Magnus Carlsen is the new Vishwa Nath (lord of the world). Home turf couldn’t save Brazilian team from a terrible defeat while the Germans played flawlessly to lift the FIFA cup. If Neymar’s injury fractured the pleasure of football aficionados, a bouncer claiming Cricketer Philip Hughes’s life crossed the boundaries of shock.
People behind the “Interstellar” deserve kudos. They liberate our minds and push us towards unknown frontiers. I salute Indian scientists for the ‘Mangalyaan’ (Mars mission) that cost lesser than a Hollywood movie. I hope they can also find a cheaper cure for Ebola that claimed thousands of lives. While we are proud of Mars missions and ‘Rosetta space probe’, humanity should also live sustainably to keep ‘mother earth’ the most beautiful place in the universe.
What is missed in the unprecedented verdict in 2014 general election is the hunger for change in “young India”. The old scions overlooking this transformation are scratching their heads. Look deeper, the youth is changing the narrative across politics, business and society at large. Venture capital investment in startups tripled this year with investors betting on young Indian talent. One may abhor the addiction to whatsapp or candy-crush, the fact is that rising internet penetration is throwing exciting opportunities. It’s not about the soaring valuations of FlipKart, Zomato, InMobi or Zoho but a pervasive revolution underway. This generation has a different DNA with a favorable eco-system to boot. Day is not far to have our own Elon Musk, Jeff Bezos and Larry Page pushing the horizons of innovation. Look at the renaissance in literature with the arrival of many young authors. Generations that never looked beyond Cricket are surprised at shooting popularity of several other sports. There are outstanding examples of young social entrepreneurs whose “spirit of doing good” is making visible impact. Stories abound. This is just the beginning. The “awakened young Indian” is my person of the year. I salute you. Standing ovation.