Trust and Investments have Perfect Positive Correlation.

One would typically invest their money in an asset where they have trust and conviction. Trust can be driven by multiple factors; it could be on the management, business model, governance, government and the like.It is also implied when distrust comes in, capital goes out!

Research firm Edelman Berland released its 15th annual trust and credibility survey, The 2015 Edelman Trust Barometer. This online survey sampled 27,000 respondents globally who are informed public.

It is interesting to note that among the developing nations India stands out in Trust in their Government over the last year.Trust levels in India got a booster from 53% in 2014 to 82% in 2015, thanks to Modi’s government. Of course the pace of reforms could be much faster, at least there is a trust that the government is working hard towards it.

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Compared to other developing markets, China also has similar level of trust in their government, followed by Indonesia but the clear differentiating factor is Trust in Business. China has deteriorated from 77% to 70%, while India improved from 79% to 84%.India also stands second in Business Innovation. When confidence in the government and business are in tandem, it is probably the best time to invest in businesses/equities for long term wealth creation.

I believe readers agree with me, with reasonable confidence, that trust and investments are perfectly positively correlated.

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AUTHOR: Pavan Kumar Kopparam, Associate Principal – Research & TopValue

 

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