MoneyControl Pro Panorama | Investors should keep a careful eye on LatAm as it presents a danger to corporate India

 MoneyControl Pro Panorama | Investors should keep a careful eye on LatAm as it presents a danger to corporate India

This morning's Moneycontrol Pro Panorama includes the following topics: India is leading the way in the transition to green hydrogen, Kerala is on the verge of a financial disaster, China can no longer complain about climate change, and uranium prices are skyrocketing in case of conflict.

Investors would be well advised to keep a careful watch on LatAm as the area has the potential to significantly impact financial markets and corporate profitability.

To my dear reader,

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Despite its distance from India, Latin America (Latam) is becoming more and more influential in the financial markets because to improved trade relations. Due to its abundance of resources, the area exports significant amounts of agricultural and industrial raw materials. Commodity markets are impacted by any interruption to production, exports, or shipping, which in turn impacts industrial customers and, eventually, consumers.

The state of the economy is another source of risk. Spending more means that countries in the area will always get bailouts. Voters elect politicians who promise to improve a malfunctioning system. However, once in office, these same politicians find it difficult to enact harsh changes. This appears to be a recurring cycle.

"LatAm is going through what Asia went through in the 1997 Southeast Asian currency crisis due to a strong dollar and increasing interest rates. In today's editorial, Vijay L. Bhambwani says, "Paying (interest) and repayment of dollar loans is becoming an uphill task for LatAm countries." Need to read.

Executives and legislators are forced to resort to harsh taxation and fire sales of extracted materials in order to obtain money. This may put metal equities at danger, Bhambwani said. Since profit margins have been steady and company volumes have increased over the past six months, metal stocks have been among the NSE's comparatively better performing sectors.

Nor are metals the only industry whose fortunes are linked with the growth of Latin America. Forty-one percent of UPL's sales, the biggest crop protection goods firm by revenue, comes from Latin America. Latin America holds the key to a potential comeback after what has been the most difficult year (2023) for the global agrochemical business in recent memory.

Latin America is probably the most important area to watch during H2FY24 since it enters the crop season with large stocks in its distribution chain, according to analysts at Kotak Institutional Equities. This is because different regions have different crop calendars. starts." During the first half of FY24, UPL's income decreased by 18%. In the quarter ending in September 2023, the business lost money.

Agrochemical makers' profits are being squeezed by surplus inventory and price reductions, while the demand forecast is being clouded by warmer weather and possible changes in crop patterns.

These instances demonstrate how LatAm may have a significant impact on financial markets and business profitability, so investors would be well to maintain a careful watch on the area.