Invest Without Emotions
Is the RBI going to surprise the market with a rate hike when it meets on July 30th? If past is prelude, then the RBI, having to deal with a lame-duck government, might just pull the trigger on this one. Consider what it did during the Asian currency crisis back in 1997/98 (courtesy Barclays):
If FII inflows don’t hold up, then they might just do this. Interesting times…
The Nifty clocked in a modest +0.34% rise this week, largely driven by FMCG.
| GODREJCP | +11.88% |
| GSKCONS | +13.49% |
| HINDUNILVR | +14.05% |
| ASHOKLEY | -14.61% |
| YESBANK | -13.43% |
| INDUSINDBK | -11.50% |
| GOLDBEES | +0.65% |
| NIFTYBEES | +0.50% |
| JUNIORBEES | +0.22% |
| INFRABEES | -1.00% |
| PSUBNKBEES | -5.14% |
| BANKBEES | -5.42% |
The A/D line continued on its downward trajectory…
The yield curve inverted…
And the market went all defense…
Mr. Bernanke, Fed Chairman: Nobody really understands gold prices and I don’t pretend to understand them either.
The Indian healthcare industry was dubbed the “most corrupt service in India” in a 2003 British Medical Journal titled “Health Care Is Among the Most Corrupt Services in India.” While this statement will certainly rile the fragile egos of “patriotic” politicos merely because the statement featured in a British journal, fact is that the truth of this statement is proven time and again.
India is a country where parents dream of their children being doctors or engineers. There’s a dearth of medical seats in colleges, making it the perfect breeding ground for corruption. The bribing process kicks in here. By the way, many of these colleges get their accreditation by paying bribes to the likes of Dr. Ketan Desai, ex-President of the Medical Council of India, so there are no guarantees of the quality of education, faculty and infrastructure that will be provided or the availability of essential equipment and facilities for practical trainings.
Scams are commonplace in Indian healthcare. Remember the $30 billion medical seats scam where students without science backgrounds were awarded MBBS seats for a bribe of ₹12-40 lakhs? What about the ₹10,000 crore National Rural Health Mission (NRHM) procurement scam that involves the former Family Welfare Minister of Uttar Pradesh?
In 2010, aforementioned Dr. Desai accepted a bribe of 2 crore to license a medical college. More recently, the Central Drugs Standard Control Organization (CDSCO) found that doctors from different parts of the country are endorsing drugs (some of which are banned outside) from certain drug manufacturers without performing clinical trials. In 2009, Tata Memorial Hospital (TMH) was involved in a multi-crore scam because of misappropriation of medicines.
India spends less than 1% of its GDP on public healthcare services. Over 65% of the population does not have access to critical medications and public health centers do not have the equipment for many diagnostic tests. Furthermore, a bare handful of these centers are accessible to the rural populace.
The Finance Ministry allocated ₹37,330 crore to the Ministry of Health and Family Welfare in the 2013-14 budget, a small hike of 8.24 percent since last year. While experts argue that healthcare has not been given its due in this year’s budget, is it really the budget that is the problem? There are schemes and schemes but when do the sanctioned free medicines and basic healthcare reach the right people?
The government has included rag pickers, rickshaw pullers, mine workers, etc., in the Rashtriya Swasthya Bima Yojana (RSBY) to provide health services to all. But without strengthening the infrastructure and distribution mechanism, these measures only worsen the deficit seen in public healthcare.
Public sector doctors are not well-paid so they either shirk work or perform unnecessary surgeries on ignorant patients to make money on the side. A government investigation reveals that over 12% of hysterectomies carried out in a Bihar district were unnecessary. In Rajasthan, 70% women who visited a clinic have had a hysterectomy. Not only are these rural women the targets of medical malpractice but their families are under debt because of the funds they procured for the surgery.
While public sector hospitals chug on, the less regulated private healthcare domain is flourishing … at the cost of patients. These hospitals charge exorbitant rates for the most minor procedures and consultations and despite it all, have many incompetent doctors on roll. Remember the Anuradha Saha case? She came to hospital to get treatment for a skin rash but lost her life because of the negligence of reputed “senior” doctors. Anuradha was prescribed inappropriate doses of steroids that depleted her immune system, making her prey to sepsis. But she is just one of thousands, if not millions of Indians who die because of medical negligence.
Clearly, the issue with Indian healthcare is not funding but corruption. Healthcare in India is highly unregulated and providers are not made accountable for outcomes. There is no formal patient history management system in India – the root cause of many fatalities. Hospitals continue to run in chaotic states where anyone, and I mean anyone, can play with lives. In a very recent incident, a rickshaw puller (whose job was to transport dead bodies) was allowed to give a life-saving injection to a 7 month old child who ultimately died at an Uttar Pradesh government hospital. A year before, the same hospital was pulled up when a sweeper was found suturing wounds.
While I don’t paint all medical colleges and hospitals with the same brush, the rising incidents of medical negligence and malpractice in India are clear indicators of the abysmal quality of healthcare providers and practitioners that we, the common people, are compelled to trust with our lives and health every day. The only recourse for patients in India is to go to court. But that’s another story in itself.
The government believes public private partnerships (PPP) will solve the hellish state of Indian healthcare. But will it? It’s not as though private hospitals are doing a great job of delivering quality services. PPP may only lead to the corporatization of healthcare and a wider nexus of corruption. Basic healthcare could become even more inaccessible to low income groups.
Note from JP Morgan:
Over the past 18 months, we have cut our 2013 EM growth forecast from 6% to 4½%. We continue to see downside risk with activity data tracking below our Q2 projections and no evidence of policies to reverse this slowdown. A number of EMs have inflation pressures and weaker currencies that require tighter monetary policies while wage pressures have eroded profit margins and thus corporate expansion. This slowdown has momentum. At some point, the EM slowdown could drag DM along.
The EM equities have performed the worst:
And FII’s have been evacuating the bond markets:
Credit Suisse: In India, foreign investors’ fixed income holdings fell sharply in June and continue to fall in July. We expect selling to subside and buying to resume in 3Q 2013.
Barclays remains bullish on the Rupee: While near-term depreciation risks remain, the INR has fallen significantly since early May, and in this context we expect the currency to appreciate against the USD over the coming year. We believe this will be driven by a narrower current account deficit and policy initiatives that can meaningfully ease funding concerns (ie, NRI bond issuance), as well as RBI rate cuts facilitated by relatively subdued inflation pressures. Despite the limited potential downside to USD/INR near term, the rupee is now 15% undervalued versus the USD, according to our estimates.
Investors will do well to remember this titbit: When John Pierpont Morgan was asked what the stock market will do, he said “It will fluctuate.”
The Nifty surged 2.40% this week, driven largely by Infosys and the IT sector in general.
| NIFTYBEES | +2.33% |
| BANKBEES | +2.03% |
| JUNIORBEES | +1.70% |
| GOLDBEES | +1.32% |
| INFRABEES | -0.34% |
| PSUBNKBEES | -0.85% |
Did short-term rates actually go up?
IT up, Autos down.
If there is schlepping involved, it is more likely to be real work. If there are sexy elements involved, it is more likely to be conspicuous production pretending to be work. Sexy work is easy to enjoy, learn, value and integrate into your identity, primarily because it is downhill psychological work: it is the cognitive equivalent of muscular atrophy. Schlep work is harder to enjoy, learn, value and integrate into your identity, primarily because it is uphill psychological work for a social species.
Source: You Are Not an Artisan
