Person of the year 2015…

By: Navneet Munot, CFA, CIO, SBI Mutual Fund and Director IAIP

Like every year, there were several contenders. I salute Aung San Suu Kyi, ‘the lady’ of Myanmar. She joins the league of outstanding leaders who change the fortunes of a nation.

My heart goes to Hajj pilgrims who lost their lives in Mecca. Mount Everest melted with pain to see Nepalese children under debris. Disasters like Storm Desmond, Chennai floods and heat-wave in Pakistan expose the dark side of our uninhibited growth. Finding traces of water on Mars is good but let’s find ways to keep our cities livable. The COP21 team at Paris deserves the award for their efforts to save the future generation from Mother Nature’s fury.

The pugmarks of terrorism became visible across the world map. The beautiful Paris suffered a barbarous attack. It made Russia’s Putin a strange ally of west. But remember, all their enemies aren’t common. Attacking with drones and killing a few leaders and many soldiers sporadically can’t defeat a radical and contagious ideology. Al-Qaeda yesterday, ISIS or Boko Haram today. Middle-east and North Africa is a minefield. Ousting them from Syria is possible but preventing a re-assembly in Afghanistan later may become ‘Mission impossible’.

Blood stains on Eiffel Tower are helping resurgence of nationalists like Marine Le Pen. Political economy will make it difficult for Angela Merkel to remain an Angel for refugees. Europeans won’t build a ‘Grand Budapest hotel’ for them. Probability and consequences of a Brexit or Grexit are unknown but a re-think on Schengen could create an existential threat for EU.

Events in Greece made me understand why anything not easily understood is called ‘Greek’. I loved Varoufakis, their biker finance minister. Draghi’s ECB has done “whatever it takes” but pumping more gasoline can’t fix a weak engine.

The year saw central banks taking divergent paths. “Will she, won’t she” was the mother of all debates in financial markets. Janet Yellen finally moved out of zero bound. Don’t get Fed up, question hounding next year will be – none more, some more or a lot more (rate hike).

The rise of nationalist fervor and treaties like TPP and bilateral deals don’t augur well for future of globalization. The spirit of one universal market can reboot the sputtering global trade.

China sneezed, emerging markets caught a cold but commodity producers contracted pneumonia. Emerging markets saw their economies, asset values and currencies submerging. Democracies and economies have their self-correcting mechanisms. There are signs of cleansing political winds in countries like Argentina, Brazil and Venezuela. Commodity prices and corporate profits are bottoming. Bargain-hunters, draw out your fishing nets.

Slowdown, Collapse, Crisis, Downfall and Bubble are the top suggestions of the Google search-box on typing “Chinese economy”. Just glance at the might of BAT (Baidu, Alibaba, Tencent) before Betting on imminent collapse of Dragon. It is undergoing a painful but powerful transformation, perhaps, the way a dragon changes its skin. Deadweight of investment and credit-led bubble is bursting to give birth to a consumption and services led economy. Pundits predicted Renminbi to devalue to 7/$. A currency war unleashed could have as dramatic consequences as 7th episode of Star Wars. This is their SDR moment: Special status for currency by IMF, Drawing a new Silk route and asserting its Right in South China Sea. China at crossroads between ‘an awakened force’ or a shattered empire was a strong contender.

Narendra Modi, the chief Marketing Officer of brand ‘India’ deserves salutation for taking India to top of the FDI league. Biharis were not convinced but Baharis (outsiders) are absolutely charmed. He lost ballots to Nitish, Lalu and Kejriwal but won a bullet train project, a landmark border settlement with Bangladesh and Rafale fighters. Though his tea party failed in ending the ‘Tamasha’ in parliament, he got rousing approvals outside India. Grand Old Party would know that a ‘Bahubali’ reform like GST for Nation can Herald a new era.

Nation is in a ‘Piku’ moment: less motion, more emotion! Chandrababu’s plan to metamorphose Amravati into Lee Kuan Yew’s Singapore gets less limelight than Hardik Patel, Indrani Mukherjee or RadheMaa. Column space and Prime time devoted to the loss of APJ Abdul Kalam, the greatest Indian of our times relative to Yakub Menon’s hanging reflect the state of public discourse. The debate on intolerance has reached intolerable decibel. Let’s ‘beef’ up fight against the poverty. Let’s not rant about ‘awards’ but for real rewards for the “common man”. We will miss the ineffable RK Laxman.

Raghuram Rajan crossed the 007 hurdle (repo at 6.75%) but bond yields refuse to nudge down. This mystery like ‘Spectre’ can be solved only by a James bond. The battle against inflation is surely won but the war may still be on. Commodity prices may not remain low forever. Rajan is a willful supporter of banks’ crackdown on defaulters. “Kings of good times” should watch their calendars. Modi and Rajan are bravely steering India towards a cashless society.

Will Hillary Trump everyone to enter the White House or Trump will have the last Hilarious word. My American friends, make your political debates serious, not religious. Given the world we are in, a lot is at stake in 2016 elections. I almost awarded John Kerry for the historic Iran deal but for his ill-informed comments on India’s stand on climate change.

Djokovic and Andy Murray rule the court but Serena Williams is the greatest star. India’s Saina and Sania shined this year. While praising Lewis Hamilton, we pray Schumi wins his race for life. FIFA got blotted again with Blatter episode. The intertwining of sports, money and politics has made for a dirty game in India also. Volkswagen scam emits important lesson for all – integrity means doing the right thing when nobody is watching.

Another contender were interesting concoctions like Pfizer-Allergen, Dow-Du Pont and AB InBev – SabMiller. Japan Post IPO created history. Cheaper oil blew smoke in credit markets, but airlines accumulated frequently flying profits.

Geopolitical risk isn’t leading to a glittering gold or boiling oil. Something else is at play. Hedge funds are falling like ‘house of cards’ as evaporating liquidity and beast of volatility made many its prey. Beta products (ETFs) are growing while those betting on quality stocks turned out to be the only ‘alpha’ male (and females). A savings revolution has begun in India, akin to the 401 (K) moment in U.S.

I thought of Patanjali for becoming one of the largest brands. Afflicted with pollution and lifestyle diseases, Indians may rediscover alternative medicine like Ayurved, naturopathy, organic food and spiritual tourism. With India’s increasing ‘soft power’, they may become fastest growing export avenues. I bet.

Zuckerberg got “likes” for showing a spiritual Face and marking his entire Book for charity. Notwithstanding the obsession with selfies, the defining characteristic of this generation is caring and sharing. I hope Artificial Intelligence, Robotics and virtual reality don’t make it a tearing economy as businesses get Uber’ed, Airbnb’ed, and Netflix’ed.

In 1830s, the invention of steam engine, electric motor and cheap iron led to the industrial revolution which changed the way humanity lived. We are witnessing the eruption of pervasive forces born of the union of cognitive intelligence, computing power and ubiquitous broadband. With a bank branch in every mobile phone, the branch on the corner might go the way of Phone booths. Real estate agents may soon be endangered like travel agents with advances in Virtual Reality (VR). Driverless cars, battery technology and ride sharing will change the face of transportation. Watch Silicon Valley and not Detroit to get glimpses of its future. Will coal-fired mega power plants be replaced by solar farms in every neighbourhood? Will A.I. powered drones supplant delivery boys? Maybe. Mega factories in China may have to worry about local stores using 3D-printers and nano-particles to produce custom toys on-demand. Look beyond the price chart of Bitcoin, the crypto currency, and you would realize how the concept of the blockchain can lead to unthinkable solutions for a complex world. Take my byte, its one of the biggest inventions of this century.

With exponential power of computing and connectivity, we are entering a period of Extreme Transformation. Shape up or ship out. DIET (Distributed, Intelligent, Empowering Technology) is my person of the year. A Standing Ovation!

-NM

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