Learning from ASEAN

It will also be impossible to renew the compact with the neighbours without reviving the SAARC process. In their book The ASEAN Miracle, Kishore Mahbubani and Jeffery Sng describe in detail the need for SAARC to learn from the success of ASEAN. Mr. Mahbubani suggests that leaders of SAARC countries meet more often informally, that they interfere less in the internal workings of each other’s governments, and that there be more interaction at every level of government. They also say that just as Indonesia, the biggest economy in the ASEAN, allowed smaller countries such as Singapore to take the lead, India too must take a back seat in decision-making, enabling others to build a more harmonious SAARC process.

“It is much safer to be feared than to be loved,” wrote Niccolo Machiavelli, “when one of the two must be wanting.” The government’s challenge is to steer India towards a course where it is both feared and loved in appropriate measure, and away from a situation in which it is neither feared nor loved.

Sharp correction: on stock market volatility

Investors who expected 2018 to be yet another blockbuster year for stocks may have to temper their expectations. After a strong start to the year, since the beginning of February, stock markets around the world have witnessed a sharp correction. The U.S.’s decision to impose import tariffs on steel and aluminium was the latest development to infuse a sense of uncertainty. As of Tuesday, the Sensex and Nifty are marginally down since the beginning of the year. While the poor state of health of public sector banks has added to the pain, market breadth suggests a more broad-based decline. Notably, this correction comes after a record bull run that stocks enjoyed in 2017. While the Sensex advanced about 28% in 2017, the Nifty climbed 30%. Judging by the initial trading sessions of the Indian indices in March, markets look likely to keep investors on their feet. After the sharp correction in February, many expected Indian stocks to rebound to new highs, as in the case of previous corrections. But the Nifty and the Sensex, which traded sideways until Monday after their initial fall in February, resumed their short-term downtrendon Tuesday. Whether they will break lower to experience further correction or consolidate for a while before moving upwards is anyone’s guess. But it is no secret that investors have been willing to bid up the prices of Indian stocks far ahead of their fundamentals. Despite the absence of any strong rebound in corporate earnings, an underperforming economy and economic shocks such as demonetisation and the GST, investors have found enough reason to stay optimistic about Indian stocks. It is only natural that stock prices have begun to reflect, at least partially, the underlying risks.


Going forward, the biggest challenge to stock prices will be higher interest rates as central bankers move to rein in inflation amid strengthening economic growth. The U.S. Federal Reserve is expected to reduce the size of its balance sheet by $2 trillion in the next four years as it moves to let interest rates rise. Bond yields have begun to reflect the prospect of tighter liquidity. The U.S. 10-year Treasury has almost approached the 3% mark from just around 2% in September last. Many noted bond investors have confidently proclaimed the end of the multi-decade bull market in bonds, which began in the early 1980s. The Indian bond market too has witnessed a sharp increase in yields in the last few months amid fears of faster inflation as well as the government’s worsening finances. Compared to the taper tantrum of 2013, stocks have in recent times been relatively subdued in reaction to the prospect of higher interest rates. But higher interest rates are likely to eventually dampen stock prices. All this suggests that stocks may be set to experience more volatility than in the last few years.




Meaning: Restore to life or consciousness.

Example: “Both men collapsed, but were revived”

Synonyms: Resuscitate, Bring round


Meaning: Free from disagreement or dissent.

Example: “Harmonious relationships”

Synonyms: Friendly, Amicable

Antonyms: Hostile


Meaning: Guide or control the movement of (a vehicle, vessel, or aircraft), for example by turning a wheel or operating a rudder.

Example: “He steered the boat slowly towards the busy quay”

Synonyms: Guide, Direct


Meaning: A person’s state of mind seen in terms of their being angry or calm.

Example: “He rushed out in a very bad temper”

Synonyms: Temperament, Disposition


Meaning: To only a limited extent; slightly.

Example: “Inflation is predicted to drop marginally”

Market breadth

Meaning: Market breadth is a technique used in technical analysis that attempts to gauge the direction of the overall market by analyzing the number of companies advancing relative to the number declining.


Meaning: Increase in scale, value, or power.

Example: “Deer numbers have been climbing steadily”

Synonyms: Increase, Rise

Antonyms: Fall, Decrease


Meaning: A downward tendency, especially in economic matters.


Meaning: Combine (a number of things) into a single more effective or coherent whole.

Example: “All manufacturing activities have been consolidated in new premises”

Synonyms: Combine, Unite


Meaning: Hopeful and confident about the future.

Example: “The optimistic mood of the Sixties”

Synonyms: Cheerful, Cheery

Antonyms: Pessimistic, Negative


Meaning: Keep under control; restrain.

Example: “With an effort, she reined back her impatience”

Synonyms: Restrain, Check


Meaning: Surrounded by; in the middle of.

Example: “Our dream home, set amid magnificent rolling countryside”

Synonyms: In the middle of, surrounded by

Antonyms: Surrounding


Meaning: Declare officially or publicly to be.

Example: “He proclaimed King James II as King of England”

Synonyms: Declare, Announce


Meaning: An uncontrolled outburst of anger and frustration, typically in a young child.

Example: “He has temper tantrums if he can’t get his own way”

Synonyms: Fit of temper, Fit of rage


Meaning: Overcome, quieten, or bring under control (a feeling or person).

Example: “She managed to subdue an instinct to applaud”

Synonyms: Conquer, Defeat


Meaning: Make less strong or intense.

Example: “Nothing could dampen her enthusiasm”

Synonyms: Lessen, Decrease

Antonyms: Heighten


Meaning: Liability to change rapidly and unpredictably, especially for the worse.

Example: “The succession of new rulers contributed to the volatility of the situation”