MARKET PERSPECTIVE

By J Mulraj

June 14-20, 2025

Winner takes the global debris!

Image created by Bing

World leaders, guided by the military-industrial-complex (MIC), appear to be addicted to forever wars. All countries are increasing the share of defense in GDP, diverting resources that would, otherwise, be used for health, education, environment and progress. Shareholder capitalism, which focuses on investors (other stakeholders take a back seat), seeks, as its principle, the increase of shareholder wealth. For the MIC, with most companies being listed, this translates to more wars. How else can defense companies improve shareholder wealth than by using their products? Hence, the forever wars.

What a sad commentary on mankind! In Earth Song, Michael Jackson captured the sentiment by singing

Did you ever stop to notice

All the blood we’ve shed before?

Did you ever stop to notice

This crying Earth, these weeping shores?

World leaders haven’t stopped to notice. Instead of trying to bring existing conflicts to an end, they have started a new one last week, with an air attack by Israel on Iran, which, it believes, is close to enriching uranium to weapons grade material, posing an existential threat to it. Israels first strike succeeded in the precision targeting of several top leaders of IRGS (Islamic Revolutionary Guards Corp), and of top scientists leading its nuclear program.

Iran, which claims that its nuclear program is for generation of electricity only, struck back with a missile and drone attack. Some of them managed to pierce Israel’s Iron Dome and led to casualties.

Iran now fears that Israel may attempt an air strike at Fordo village, 26 miles south of Qom, where its stockpile of enriched uranium is stored in underground caves in the mountainside. These can only, possibly, be hit by a ‘bunker busting bomb’, which Israel does not have, but USA does. President Trump says he will decide in 2 weeks whether to enter the conflict or not. If USA does, the conflict would dangerously escalate. (Just to clarify, the alliterative bunker busting bomb is slightly more than dangerous than Trump’s big beautiful bill!)

As depicted in the illustration above, jingoistic world leaders are playing a dangerous game of geopolitical chess, where the pieces are deadly, nuclear, missiles. We can only pray for divine intervention, if talks, to be held in Geneva, between Iran and heads of France, UK and Germany, fail to stop the conflict.

Let us pray.

USA has diverted its USS Nimitz aircraft carrier group from the South China Sea to the Middle East. This makes it relatively easier for Xi Jinping to attempt his long desired takeover of Taiwan, thus embroiling the world into yet another undesirable conflict. Earth Song, again

Did you ever stop to notice

All the children dead from war?

Did you ever stop to notice

This crying Earth, these weeping shores?

In a war atmosphere various narratives are floating around; one has no way of knowing their veracity. So, in the Israel-Iran war, some narratives say that the nuclear storage facility at Fordo is so deep that it cannot be destroyed, even by bunker bursting bombs, each weighing 30,000 pounds. Others say it can, but will delay the ability of Iran to produce a nuclear bomb, if it wants, not destroy it. The danger is that it might draw in, eg, China, which relies heavily on Iranian oil passing through the Strait of Hormuz. The price of Brent crude has gone up from $ 65/b to $ 76/b in the past one month. The war will definitely raise logistic costs of crude oil passing through the Strait of Hormuz, and would skyrocket if Iran blockades it, as it has threatened to.

There are, also, opposing narratives on President Xi Jinping. This one says that elders in the CCP have done a coup against Xi who may step down before the next plenary session in July or August. The new dispensation may work closer with the West, so any easing of the trade war would be welcome news.

But then this video wonders whether Xi will strike at Taiwan whilst the world is distracted by events in the Middle East.

So the geopolitical picture is blurry, which will make stock markets  very volatile.

Rising price of crude oil will adversely affect the Indian economy, which, today, imports 87% of its needs. In April, crude oil imports went down 17% due to lower prices and lower consumption, thanks to renewables and advent of EVs. But the import bill would rise in June due to the I-I war. But there is great news announced by Hardeep Puri, Petroleum Minister. A huge oil discovery is very likely to be made in the Andaman Islands, estimated at 4.5 billion barrels of crude. Besides, India is also building large capacities in wind and solar.

In technology, India has been able to send a secret message over a distance exceeding 1 km, using the new technology of quantum entanglement. US and China are also in the race to have secure communication using quantum entanglement.

Quite an advance from the days of the licence- permit raj and red-tape entanglement!

In the military domain, India is now testing the indigenously developed Kaveri engine, used to power fighter jets. India is also making good progress in its next generation AMCA (Advanced Medium Combat Aircraft), developed indigenously. This will enable it to increase squadron strength from the current 31, badly needed in the eventuality of a two front war.

In the light of such achievements, it is perplexing to read about the thought being given by the GST council to introduce a new tax rate, 40%, for ‘sin goods’ perhaps including on cars! This is insane! The Indian auto industry contributes a 7.1% share of India’s GDP, and 49% to manufacturing GDP. It provides 30 million jobs, both direct and indirect.

It beggars belief that when scientists are providing amazing achievements (Kaveri, AMCA, quantum entanglements etc), narrow minded, pencil pushing, bureaucrats are contemplating a 40% GST rate, in the first place, and thinking of imposing it on a sector that contributes so much! There are plenty of times when lowering a rate increases tax revenue, but the lessons are lost on myopic and thoughtless bureaucrats. They are the ones holding India’s growth down.

Last week the BSE Sensex ended at 82408, up 1290 points over the week. Up, despite the start of a new, potentially dangerous, conflict.

A correction is needed, both in the stock market and in the mindset of jingoistic world leaders seeking forever wars.

Comments may be sent to jmulraj@asiaconverge.com