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Is it time for emerging markets investors to switch out of China and back Indian stocks?

2021 has been a tough year for investors in Chinese stocks which have been…
The post Is it time for emerging markets investors to switch out of China and back Indian stocks? first appeared on Trading and Investment News.



2021 has been a tough year for investors in Chinese stocks which have been put under pressure by a combination of factors. The MSCI China index hit a record high in February but has lost over 30% since then and is down by close to 20% for the year-to-date.



Over the same period, Indian stocks have done very well indeed. The MSCI India index is up around 28% over the year-to-date. By contrast, the UK’s FTSE All Share index has gained 9% this year, the FTSE 100 8.4% and the tech-heavy Nasdaq in the USA has gained a significantly lower 18.8%. Even the S&P 500’s 2021 returns of 22.6% are some way off the MSCI India.



The losses for Chinese stocks and gains for Indian stocks over 2021 can be interpreted in two ways. The first would be to see a buy opportunity for Chinese stocks. That would imply long term faith in China’s private equity markets and a belief recent valuation drops mean there is currently value to be had in China.

The other way of looking at it would be to infer geopolitics, global economic trends and the new policy of China’s authorities to limit the size and influence of the country’s biggest companies means Chinese stock markets have had their day in the sun and could now be entering a long winter. And that India’s economy and private equity markets will remain in the ascendancy, making it the most attractive of the larger emerging markets for investors to have exposure to.

Which is right? Should you be snapping up discounted Chinese stocks or abandoning the market and changing horses to India’s stock market? Let’s take a look.

What’s happened to Chinese equities in 2021?

The biggest factor to have dampened international investor appetite for Chinese stocks is the government crackdown on the huge country’s biggest technology companies like Alibaba and Tencent but extending across the sector. Moves to deleverage huge construction companies like Evergrande have also hit sentiment even if there is tacit recognition that may strengthen China’s financial systems in the longer term by removing a potential major systemic risk.

However, with most international investment trusts and funds focused on Chinese equities heavily exposed to the valuation of China’s biggest technology companies, which comprise a heavy weighting in all major indices, it is their woes that have had the biggest negative impact on returns this year. Three of the biggest China-focused investment trusts, JPMorgan China Growth & Income, Fidelity China Special Situations and Baillie Gifford China Growth, all count the two tech giants within their top three holdings.

Hong Kong-listed Alibaba has seen its market capitalisation almost half in 2021 with losses of 47.5% for the year-to-date. Tencent, also listed in Hong Kong, is down 19.2% this year as a result of moves by regulators to limit the screen time, introduce new data protection laws and require all new apps to receive government approval before they can be published.

alibaba group

Baillie Gifford director James Budden commented for The Times newspaper:

“The reality is that big tech is under the microscope globally because of its growing influence, and the regulatory framework is tightening everywhere. For better or for worse, the difference is that China’s system of government allows it to act faster.”

Of course, for investors considering emerging markets exposure today, the question is less what has caused the downwards pressure on Chinese stocks in 2021 and more whether those influences have already been fully priced in. If they have, moves to the upside may come next. If they haven’t, there could still be more pain to come for China’s private equity markets.

Catherine Yeung, investment director at Fidelity China Special Situations and Asian Values trusts, thinks the latter scenario is likely to be closer to how it pans out, commenting:

“We’re probably moving into the second phase where you’re going to hear continued newsflow around the policy that has been announced. We don’t think we’re going to see any big surprises.”

However, it’s hard to argue Ms Yeung’s position is not compromised by the fact she heads up a fund whose success relies on investors keeping faith in China’s growth story. But flows of capital into, and circulating within, emerging markets funds suggest many investors now see more potential in India’s stock market over coming years. Capital flows like the look of the trends in favour of the economy of the world’s second most populous nation.

Why are investors pouring capital into India?

India has a growing middle class, a much younger population than China and relatively strong rule of law compared to emerging markets competitors. And there isn’t the same kind of geopolitical tension between Delhi and the largest developed market economies like the USA, Germany and the UK as currently sours relations with Beijing.

However, might strong gains over the past year mean Indian stocks currently look expensive? Indian companies do look more expensive than Chinese peers with the MSCI India index’s forward price earnings ratio at a multiple of x23 as of the end of October. At the same time, the MSCI China index was trading at a forward price earnings ratio of 13.

Indian equities have since dipped, lowering that multiple slightly. But so have Chinese stocks, meaning the gap remains similar to what it was a month ago. The emerging markets average is also a forward price earnings ratio of 13, putting Indian equities well ahead of most rivals in the premium they command.

There is an argument India’s prospects support that premium but it does expose investors to some risk. In November, the share price of the Indian fintech One97 Communication , which owns the popular payments app Paytm, which had recently become the country’s largest ever IPO, fell by over a third during its first two days of trading. Overvalued tech IPOs are one major tell-tell sign of an overheated market. There has, however, since been a 21% recovery from that early low.

one97 communication ltd

India’s largest companies have also seen strong earnings recovery this year, supported by the rollout of a mass Covid-19 vaccination programme and government policy, including tax reform and state-backed loans that have helped businesses through the pandemic. Those factors offer some kind of buffer for relatively the high current valuations of many Indian large-caps.

India’s mid and small-cap companies are also far cheaper than the country’s large caps. For investors worried that valuations look stretched at the top end of India’s stock market, smaller companies could still be an attractive bet. One trust that offers that option is Ashoka India Equity whose portfolio has an allocation of less than 40% to companies worth over £10 billion. That compares to the 78% exposure the MSCI India index has to Indian large caps.


The latest Omicron variant of the Covid-19 virus could mean more stock market volatility in the months ahead. India may be more affected by that than China, whose strict lockdown policies have largely controlled the day-to-day societal impact in the country and brought infection levels down to levels that are now very low in an international context. But of course, its still manufacturing-reliant economy is heavily influenced by what’s going on in the rest of the world.

Mid-term, the performance of Chinese equities will be heavily influenced by how new government policies actioned over the past year are enforced. And to what extent China withdraws into itself internationally compared to the past few decades as well as international relations, especially with the USA.

India’s stock market doesn’t suffer from the same kind of uncertainty. This is likely a major factor in why emerging markets investors have recently favoured it. A diversified investment in Indian stocks, especially one focused on mid and small-caps, is a bet on the growth of India’s economy over the next decade or so. It’s a bet an increasing number of emerging markets investors have been happy to make.

The post Is it time for emerging markets investors to switch out of China and back Indian stocks? first appeared on Trading and Investment News.

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About 35% of People Who Received Placebo in Vaccine Trials Report Side Effects and More COVID-19 News

According to a recent study conducted by researchers at Harvard Medical School and Beth Israel Deaconess Medical Center, 76 percent of the adverse side effects (such as fatigue or headache) that people experienced after receiving their first COVID-19…



About 35% of People Who Received Placebo in Vaccine Trials Report Side Effects and More COVID-19 News

The placebo effect is where a person who received a placebo instead of a drug or vaccine shows clinical signs, positive or negative, associated with the actual treatment. Much has been made about the side effects of the COVID-19 vaccines, but a new study found a startlingly high number of adverse events associated with people who received placebos in clinical trials. For that and more COVID-19 news, continue reading.

COVID-19 Vaccine Side Effects: Real or Placebo Effect?

A recent study out of Harvard Medical School and Beth Israel Deaconess Medical Center evaluated 12 COVID-19 vaccine trials with a total of 45,380 participants. The study found that 76% of the adverse side effects reported, such as fatigue or headache, after the first shot were also reported by participants who received a placebo. Mild side effects were more common in people receiving the vaccine, but a third of those given the placebo reported at least one adverse side effect. The statistics from the study showing that 35% of placebo recipients reported adverse side effects is considered unusually high. Several experts suspect that there’s such a high report of adverse events because of the amount of misinformation found on social media about the dangers of the vaccines and the amount of media coverage.

This is not to say that the adverse side effects felt by people who received the vaccines are all in their heads. People do have side effects to vaccines, but this study reports on an unusually high level of the placebo effect. Nocebo is used to describe a negative outcome associated with the placebo.

Source: BioSpace

“Negative information in the media may increase negative expectations towards the vaccines and may therefore enhance nocebo effects,” said Dr. Julia W. Haas, an investigator in the Program in Placebo Studies at Beth Israel Deaconess and the study’s lead author. “Anxiety and negative expectation can worsen the experience of side effects.”

Four Factors for Long COVID

A study published in Nature Communications identified specific antibodies in the blood of people who developed long COVID. Long COVID is not well understood and has a range of up to 50 different symptoms, and it is difficult to diagnose because there is no one test for it. The study, conducted by Dr. Onur Boyman, a researcher in the Department of Immunology at University Hospital Zurich, compared more than 500 COVID-19 patients and found several key differences in patients who went on to present with long COVID. The most obvious was a significant decrease in two immunoglobulins, IgM and IgG3. The study found that a decrease in these two immunoglobulins, which generally rise to fight infections, combined with other factors, such as middle age and a history of asthma, was 75% effective in predicting long COVID.

75% of COVID-19 ICU Survivors Show Symptoms a Year Later

A study out of the Netherlands found that a year after being released from an intensive care unit (ICU) for severe COVID-19, 75% of patients reported lingering physical symptoms, 26% reported mental symptoms, and up to 16% noted cognitive symptoms. The research was published in JAMA. The research evaluated 246 COVID-19 survivors treated in one of 11 ICUs in the Netherlands. The mental symptoms included anxiety (17.9%), depression (18.3%), PTSD (9.8%). The most common new physical symptoms were weakness (38.9%), stiff joints (26.3%), joint pain (25.5%), muscle weakness (24.8%), muscle pain (21.3%) and shortness of breath (20.8%).

Pennsylvania Averaging Most COVID-19 Deaths Per Day in a Year

In general, COVID-19 deaths are dropping across the country. However, in two states, Pennsylvania and New Jersey, the numbers are increasing. Pennsylvania is averaging 156 COVID-19 deaths per day over the past seven days, which is a 17% uptick compared to two weeks ago. The number of deaths per day in Pennsylvania is below what was hit in January 2021, largely due to the availability of vaccines. New Jersey averages 111 deaths from COVID-19 per day, an increase of 61% over the last two weeks and the highest since May 2020. Similarly, New Jersey cases and hospitalizations are declining.

Omicron Surge: Shattering Cases and Hospitalizations, but Less Severe

According to the CDC, although the current Omicron surge is setting records for positive infections and hospitalizations, it’s less severe than other waves by other metrics. Omicron has resulted in more than 1 million cases per day in the U.S. on several occasions, and reported deaths are presently higher than 15,000 per week. However, the ratio of emergency department visits and hospitalizations to case numbers is lower compared to COVID-19 waves for Delta and during the winter of 2020–21. ICU admissions, length of stay, and in-hospital deaths were all lower with Omicron. They cite vaccinations and booster shots as the likely cause. Although the overall result is that Omicron appears less severe, it’s not completely clear if that’s because the viral variant doesn’t infect the lower lung as easily as other variants, or because so much of the population has either been vaccinated or exposed to the virus already. It is clearly far more infectious than other strains, which is placing a real burden on healthcare systems. The number of emergency department visits is 86% higher than during the Delta surge.

J&J Expects Up to $3.5 Billion in COVID-19 Vaccine Sales This Year

Johnson & Johnson projected annual sales of its COVID-19 vaccine for 2022 to range from $3 billion to $3.5 billion. This was noted during the company’s fourth-quarter 2021 report. In December 2021, the U.S. Centers for Disease Control and Prevention recommended the PfizerBioNTech or Moderna shots over J&J’s due to a rare blood condition observed with the J&J shot. By comparison, Pfizer and BioNTech project their vaccine will bring in $29 billion in 2022, after having raked in almost $36 billion in 2021. Moderna expects approximately $18.5 billion this year, with about $3.5 billion from possible additional purchases. Although final figures for Moderna aren’t in yet, they projected 2021 sales between $15 and $18 billion.

BioSpace source:

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COVID-19 cases at highest ever in Americas – regional health agency

New cases of COVID-19 in the Americas in the past week were the highest since the pandemic began and the very contagious Omicron variant has clearly become the predominant strain, the Pan American Health Organization said on January 26.



COVID-19 cases at highest ever in Americas – regional health agency

BRASILIA, Jan 26 (Reuters) – New cases of COVID-19 in the Americas in the past week have been the highest since the pandemic began in 2020 and the very contagious Omicron variant has clearly become the predominant strain, the Pan American Health Organization said on Wednesday.

There were more than 8 million new cases, 32% higher than the previous week, while fatalities throughout the region also increased by 37%, with 18,000 new deaths caused by COVID-19.

The United States continues to have the highest number of new infections, although cases decreased by nearly 1 million over the last week, the regional health agency said.

Mexico’s southern states have seen new infections triple and Brazil has seen new cases surge 193% over the last seven days, PAHO said in weekly briefing.

Medical workers take care of patients in the emergency room of the Nossa Senhora da Conceicao hospital that is overcrowding because of the coronavirus outbreak, in Porto Alegre, Brazil, March 11, 2021. REUTERS/Diego Vara

Children in the Americas are facing the worst educational crisis ever seen in the region, with millions of children yet to return to classes, according to PAHO, which recommended that countries try to get them safely back to school to protect their social, mental and physical wellbeing.

It urged parents to get their children vaccinated.

Many countries have already authorized and are safely administering COVID vaccines to adolescents, PAHO said.

Last week, the WHO’s expert group on immunization authorized the COVID vaccine developed by Pfizer Inc (PFE.N) for children aged 5 to 12 years, offering a roadmap for countries to roll out vaccines for them, the regional agency said.

Reporting by Anthony Boadle; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.


Reuters source:

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Don’t believe the claim that only 17,371 people have died from COVID in England and Wales

A freedom of information request is only useful if you know how to read the data.



There is no doubt that the pandemic has led to many deaths; however, in the past week, new claims have emerged that the true number of people who have died from COVID in England and Wales is much lower than previously thought. These claims have been widely shared on social media and even amplified by a senior MP. Can it really be true that new data shows that COVID has killed far fewer people than we previously thought?

To arrive at an answer, we first need to delve into the various ways that COVID deaths are counted in England and Wales. There are two main sources of this data: the first, published by the UK Health Security Agency (UKHSA) and featured prominently on the government’s coronavirus dashboard, is a simple count of all deaths that occur within 28 days of a positive COVID test.

The second, published by the Office for National Statistics (ONS) is based on death certificates that list COVID as a cause of death. Being based on a medical assessment of the circumstances of each individual death, the ONS figures represent the gold standard.

The UKHSA figures will include some deaths that are clearly unrelated to COVID – for example, somebody who has a mild case of COVID and is involved in a car accident three weeks later – and exclude some COVID deaths where someone is in hospital for more than 28 days. The UKHSA data gives us a picture of what is happening now – albeit an imperfect one – while the ONS data takes several weeks to process.

We also need to understand how death certificates work in England and Wales. When somebody passes away, a medical professional completes a death certificate. This includes a field for the “disease or condition directly leading to death” – often called the “underlying cause”. It also includes the option to list one or two diseases or conditions that were not the underlying cause, but which contributed to the death (“contributory causes”).

The data that the ONS publishes shows that, in 2020 and 2021 combined, 157,889 deaths were registered where COVID was mentioned on the death certificate. Of these, 139,839 listed COVID as the underlying cause. In almost 90% of cases where COVID was a factor in somebody’s death, it was considered by medical professionals to be the primary reason they died. So where does the figure of 17,371 COVID deaths come from?

Freedom of information request

This figure originates from a freedom of information request to the Office for National Statistics that asked for the number of deaths where COVID was the only cause of death recorded. This is complicated by the fact that often COVID itself can cause complications, such as severe respiratory difficulties or organ failure, which will then be listed alongside COVID on the death certificate.

To exclude these deaths, the ONS responded by giving the number of deaths where no “pre-existing conditions” were listed on the death certificate. Which comes to 17,371 for the period up to the end of September 2021. But what is a “pre-existing condition”?

Pre-existing conditions and their International Classification of Diseases (ICD) codes

Office for National Statistics

This list is extensive, including high blood pressure, asthma, COPD, diabetes and a wide range of other common conditions. The argument being made by some is that 17,371 is the true number of COVID deaths, because people with these pre-existing conditions, who make up the vast majority of deaths that list COVID on the death certificate, were already sick. But even a cursory glance at the list makes it clear that this will be incorrect for a great many people.

Over a quarter of adults have high blood pressure, 4 million people in England have diabetes and a similar number have asthma. Having one of these conditions is neither a death sentence nor a sign of being in poor health. You almost certainly know several people with one or more of them, or are living with one yourself.

The idea that people with a pre-existing condition are at death’s door is simply untrue. Over half of people aged 50 and over have at least one long-term health condition. But if someone with one of these conditions is unlucky enough to catch COVID and subsequently die, all it takes is for the condition to have some impact for it to end up being listed as a contributory cause on the death certificate.

Let’s take asthma as an example. COVID frequently attacks victims’ lungs, leading them to require ventilation. As a respiratory condition, asthma may well exacerbate these difficulties and will therefore be listed on the death certificate if the person dies. It would be bizarre to claim that the person died of asthma on this basis. Perhaps they would not have died if they didn’t have asthma, but they certainly wouldn’t have died if they hadn’t got COVID.

The vast majority of people who get seriously ill with COVID were living full, independent lives before they were hospitalised. And reasonable estimates suggest that the average number of years of life lost per COVID death is around ten. The idea that people who died from COVID are all extremely ill and would have died soon anyway is not borne out by the facts.

To argue that the deaths from COVID of people with pre-existing conditions don’t count as true COVID deaths is to say that people with pre-existing conditions don’t matter; that their lives are expendable and shouldn’t be considered when assessing the impact of the pandemic. Over 140,000 people with pre-existing conditions have died of COVID in the last two years. We should be mourning this tragic loss of life, not minimising it.

Colin Angus does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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