The gold loan business owed its glitter to a macro shift3 min read 20 Mar 2023, 10:19 PM IST
Its shine was taken off by the end of gold’s last big bull run and now the metal is likelier to boom than fortunes
A ‘macro shift’, as used here, is a long-term structural shift that can reshape economic activities and markets. Macro shifts have an outsized impact on stock markets because the accompanying churn reorders winners and losers. Indeed, some of our big stock market success stories owe their exalted status to an underlying macro shift becoming a powerful tailwind for their business. For example, the exponential spread of internet access at ever-increasing speeds laid the ground for tech-enabled services to achieve global dominance. Closer home, India’s emergence as a software export powerhouse followed the adoption of computers by American businesses intent on reducing labour costs and gained from advances in satellite communication which make outsourcing viable. The swell of unicorns created by India’s startup landscape owes much to our digital payments infrastructure. The most powerful macro shift of recent years has been a gush of money pumped into the world economy. Liquidity in response to the Global Financial Crisis of 2008 kicked off a prolonged regime of rising asset prices with across-the-board gains for global stock and bond indices. Covid-relief liquidity also meant easy money flowing from near-zero interest rates. Hordes of cash-burning tech startups attracted hefty valuations to become stock market darlings, even though profitability was not in sight.