India & EMS lag US in first 100 days of Biden as president

Joe Biden’s first 100 days as US president have proved good for the American markets, with the S&P 500 index surging over 10 per cent. India and most emerging markets (EMS), on the other hand, posted declines during the same period. Typically, most global markets move in tandem but strong economic growth in the US, coupled with aggressive stimulus measures and rapid vaccination, has propelled the world’s biggest market. Uneven economic recovery, the resurgence of coronavirus, and slow vaccination progress have crippled emerging markets like India.

“In the US, the vaccination rollout was smooth. They have already vaccinated 60 per cent of the population. The US has done well compared to most emerging markets in managing the pandemic. They have also announced these stimulus measures which are laying the ground for a strong economic revival. And that is driving flows to the US,” said Jyotivardhan Jaipuria, founder, Valentis Advisors.

India was one of the best-performing markets globally until February 15, buoyed by strong earnings posted by India Inc for the December quarter and drastic drop in Covid19 caseload. Since then, the markets have largely headed south.

“Swift implementation of vaccination pushed the US markets up. Mass vaccination gives the confidence to open up the economy. In India, we face an unprecedented health crisis — the number of cases are going up and even industrialists are suggesting more aggressive lockdown measures. We need to arrest the spread through vaccination, then only we can hope for the indices to recover. It's going to be a bumpy ride until then,” said G Chokkalingam, founder, Equinomics

Not just India, China, Brazil, and Indonesia have delivered negative returns since January 19, a day before Biden took charge. "The reopening of the US, the UK, and Europe will happen over the coming months, and it will be swift. It will be tough to predict the impact of pent-up spending on growth. I think the Federal Reserve will let the economy run hot and inflation run hot. In this period, if EMS can also make marked progress in their vaccination, we may see money moving towards emerging markets again," said Andrew Holland, CEO, Avendus Capital Alternate Strategies.