(Bloomberg) — Equity investment based on environmental, social and governance practices is gradually gaining traction in India, helped by the strategy’s relatively strong performance during the pandemic.
Since the country’s first ESG fund launched in 2018, three more have entered the field, with the category now making up 0.6% of total equity assets under management, data compiled by Bloomberg and from the Association of Mutual Funds in India show. The appeal is financial as well as socially minded, with the best performing of the new entrants recently climbing back into the green for the year, outperforming nearly 80% of its peer group. The Nifty 100 ESG Index is down 2.8% versus an 8.1% drop in the NSE Nifty 50 Index.
The global push into sustainable investing has gathered pace this year as governments channel virus-related recovery funds into health and environmental projects. Fund industry ESG AUM now exceeds $1 trillion, and 56% of sustainable funds outperformed their peers in the second quarter, according to a report from UBS Group AG citing Morningstar Inc. data.
“Stronger companies that have solid principles around ESG have been able to weather the storm well,” said Jinesh Gopani, head of equities at Axis Asset Management Co, which launched its first ESG fund in February. “They both fell less and bounced back first.”
ESG strategies are still less established in emerging markets than in the U.S., where they account for 1.4% of assets under management, according to data compiled by Bloomberg. But the category’s effectiveness through the pandemic-triggered global selloff and subsequent recovery is seen drawing more investors looking for resilience against future upheavals.
Most of India’s new sustainable funds use in-house and third-party research to assign scores to companies for various ESG metrics to short-list a pool of stocks eligible for investment. Reliable data can be hard to come by in developing markets, but that may start to change as ESG funds become more common.
ESG Pressure
“More asset managers are making ESG research a core part of their investment research,” said Ruchit Mehta, who manges the SBI Magnum Equity ESG fund, India’s oldest and largest fund in the group with about 27.5 billion rupees ($367 million) in assets. “There’s a rising appreciation among investors, as more and more companies face issues beyond the traditional balance sheet, growth and governance challenges.”
India’s market regulator requires firms to disclose their ESG policies in a standardized format. Corporations have begun to take this a step further, voluntarily disclosing more than the minimum due to pressure from investors and growing institutional appetite for sustainable options, according to Aditi Chandani, an analyst at Stakeholders Empowerment Services, a Mumbai-based research and advisory firm.
“Three years ago it would have been peripheral,” Chandani said. “Now investors are seeking more comprehensive disclosures, what targets companies are setting and how their performance compares to peers.”
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
