Currently, though, things look grim. Demand for goods and services across the globe and virtually in every industry is going to hit hard. Airlines, leisure goods, and restaurants will be the first ones to see the adverse impact. Then, in time, all businesses will experience this drop in demand during and even after the pandemic has been vanquished.
While governments and leaders are trying to help businesses tackle this, the financial markets believe more, much more, needs to be done. Thankfully, I think all governments will recognise this, and that central banks will aggressively roll out fiscal measures to kick-start the recovery. Six months down the line, it won't be Covid-19 making the headlines. I am positive that the markets, having already considered the worst-case scenario, will rise faster than it seems likely now. Markets in the USA and China will fuel this recovery; yes, the ones worst hit by Covid-19. They are dragging markets around the world down. They will also be the ones that will fuel the recovery. A historical perspective of a bear market suggests that when markets have fallen over 30%, the average duration of the bear phase is estimated to be about 250 days.
Speaking of Indian markets, after this fall, they look extremely attractive and may well be among the best buys anywhere in the world. I believe they will be viewed as great opportunities. True, Indian markets may fall even further. But that only means even more attractive valuations and investment opportunities. Consider this, at the current PE of 19.72 times and price to book of 2.82 times, and we are at 2013 levels. As a consequence, we believe yields from equity are going to be superior to any other asset class, especially once the stimulus packages come into play.
We continue to work on analyse events and help guide you to the best possible investment outcomes.
On behalf of everyone at Gaining Ground, I want to thank you for being a valued client. I wish you and your loved ones continuing good health in the coming months.