Heat wave will be a 'double whammy' for Asian economies, JPMorgan says

Indian market definitely. If you look at the current variables, your core inflation is almost at a new new low mark at this juncture. Headline inflation is bit higher because of a sticky food inflation we are seeing through, but monetary policymakers are happy with that. Along with that, my monetary policymaker are keeping a very prudent policy which let currency behave well in a scenario where dollar was appreciating and some hiccups was happening in emerging market currency world overall top of it. My fiscal policymaker didn’t put down the growth baton that they have taken over the last four years with all this backdrop happening behind the scene and then economic data point which is still continuing the momentum GST collection number making a new high IP still going higher, PMS still in expansionary territory that gives clearly a headroom to India to keep on outperforming or even performing in line with the developed markets equities overall. Now in that case post election if market sees the continuity in terms of incumbent government willing and discounting policy continuity happening that can lead to a valuation re rating for the market. I know this looks odd in an environment where India is already trading at A22P mark and I’m making such a statement. But remember for the past three years India has seen valuation derating from a 25 P multiple, India came down to 21 and all the rally came on the back of earning growth. So if policy continuity is there in place, your valuation multiples can go higher. That can take Nifty even to the 25,000 mark. Interesting, Rajeev, we were talking about this earlier and the biggest wild card really is global foot warming and how that feeds into inflation, which is a global narrative. How is that going to affect markets and and economies in our region who is most susceptible? So the rising heat wave will lead to double whammy not just on terms of higher inflation but also in terms of slowdown in growth. So what are the national impact of this one? So your power consumption goes higher which means your household savings or household expenditure move towards more filling on the power bill side which leads to inflation. Also on the same side you also see the agriculture output comes down. If you are an agrarian export economy which means rice, wheat, pulses and spices which you are exporting, that will get impacted. Your trade comes down. Not only that, even in case of government policy suddenly it has to move toward subsidizing your consumer overall rather than going with the other growth efforts overall. So that could be the case. And point being over here, I think right now the heat waves are much more pertinent in Asia or Southeast Asia, part of the world. We are seeing rising temperature in Thailand and that is one of the key reason because of rising temperature leading to growth and inflation getting impacted. We have turned neutral or downgraded Thailand to neutral yesterday and we we do think that all the South Asia economies, be it India, ASEAN countries like Indo, Thailand, Philippines, Malaysia, everyone could be under problem if we don’t try to address this global warming issue.