Money on the markets
A maturing market amid the mayhem
Metal stocks jumped on Monday, boosted by China’s move to make the yuan exchange rate more flexible.
Prices of industrial metals jumped in London as China’s pledge on the yuan raised hopes of stronger demand growth in China.
Sterlite Industries’ shares rose 8.2 percent and ended as the top gainer on the BSE Sensex. Sesa Goa climbed 9.5 percent to top the list of gainers in the metals index. Tata Steel rose 6.3 percent.
All components in the metals index posted gains, with five adding more than 5 percent.
A lot of comparisons are made between China and India but there are myriad differences between the two developing nations — some wide, some not so wide. It would be a huge mistake to believe the two markets and economies are developing along similar lines, or indeed, behaving in the same way, particularly the financial markets.
Take the respective stock markets. The first chart shows the last decade of both India’s benchmark SENSEX stock index and China’s Shanghai Composite. One thing that is immediately evident is that the Composite outperformed India by a long way in the run-up to the very overblown highs. In fact, using 2005 as a starting point it put on a staggering 380 percent while the SENSEX managed 225 percent over the same period.