I think yesterday when the market did not rally, when everybody else in the world rallied — Asia was up a good 4-5% but we did not rally — we all had the premonition that this was coming. To be fair to the Prime Minister, the way he announced the janta curfew four-five days back, he almost signalled a longer lockdown, although I have to confess three weeks is a number that many of us had not expected. I was thinking around two weeks, but it is what it is. I think the overall picture vis-à-vis India is actually getting clearer. There are several very respectable CIOs in the western world, who have said in last four-five days that if the Asian coronavirus situation continues to stabilise over the next two weeks and the overall picture of coronavirus across Asia is a picture of increasing stability as opposed to the picture in North America and Europe, we will see a wall of American money coming towards Asia through the summer. Because if you look at it from the perspective of American pension funds, where else can they put money? They have to grow their wealth. US treasuries are not going to do it. The US stock market or the European stock market cannot grow their wealth. And given the success Asia has shown, and I include India in that, in imposing difficult measures to control this, there is a pretty rosy picture ahead through the summer.
But until we get there, there are a couple of big difficulties that we have to overcome locally in India. My bigger concern in the stock market is the bond market and the money market. It is very difficult for bond traders or people in the wholesale money to do anything from home. As a result, we are seeing minimal levels of activity in the wholesale money market. That wholesale money market pretty much finances a big part of our economy, all our NBFCs and majority of our banks draw their funding from the wholesale money market. RBI will have to announce something in the next four-five days on how will the rollovers, how will the refinancing happen for NBFCs, for banks who rely on this market. That is a big call RBI will have to make, and come up with to deal with this situation.
The associated further challenge for financials is NPAs. If small businesses cannot function for basically a month, then how are they going to be able to keep with their loan repayments. So I think suspension of that 90-day NPA rule must be on the cards. I cannot quite understand why RBI is not coming forth with that. So the suspension of the 90-day NPA rule and the wholesale money market are major challenges for us.
And the final challenge we will see over the next month or so is the challenges of the logistic system. Several pharma companies have been telling me that although they are producing their stuff, there are simply no trucks to deliver their products to the pharmacists on the high street. And this breakdown of the logistics chain is something that I think the government will have to do something about. It is all very well to say we are going to be at home for 21 days and the government can reassure us on essential supplies. But if report after report shows the trucking system has come to a grinding halt, many of us are going to start thinking about where on earth will the essentials come from, if the trucks are not running.
So these are practical challenges to deal with over the next 21 days for the banking system, for the financial system and for us in our day-to-day life. But honestly if I take a two, three, four months view, given the view coming from the west, the American money will have to head big time towards Asia. On the other side of the coronavirus crisis, I am not that worried about the stock market.
If one goes by evidence, social distancing has worked and because of this lockdown social distancing will also work in India. So unlike other countries, where the coronavirus scare is real and is damaging the economy naturally, after 21 days we could potentially be coronavirus-free and that is a serious and great proposition for a long-term investor to stay invested in?
Absolutely. To be fair to the PM, he has seen that opportunity. My reading is that the cabinet and the PM have seen that opportunity and what they are doing through this lockdown is they are dragging the virus into the heat of the Indian summer. By mid-May when this lockdown ends, we will have 40-45 degree heat and the call they are making is that, if they can drag this into the Indian summer, then we can address this problem before the monsoons come. And that is going to be unquestionably a major positive for the country.
If we can show the world that something, which is completely ravaging Europe and America, is simply not as much of an issue in India as it is in the West, it is unquestionably going to be a comparative plus. Remember beyond the stock market, it is also the far more strategic plan to gain supply chain share from the Fortune 500 companies. No global CEO of a Fortune 500 company will be able to avoid restructuring its supply chain, and if we are able to show him that this is a coronavirus-free country with strong leadership arguably, we are going to get a slice of that action as well. So my reading is, the powers that be have seen the opportunity. I am glad they have and I think I agree with you that three weeks out, potentially there is a major strategic plus waiting for India. The challenge is in these three weeks. We have got a very difficult financing situation for our banking and NBFC ecosystem. We have got this NPA problem, which hopefully RBI can address. And we have got a small matter of getting essentials into the hands of 1.3 billion Indians. On the other side of this challenge, I think there lies a very positive opportunity. Effectively the global economy is being reset, this is a global economic reset, and to press the reset button India has to take a bit of pain which is what we are signing up for. For people like you and me, probably the pain is a little less, because we are in privileged positions. For people who are less privileged in our country, the pain of the reset could be greater. Can the government offset the shock for them, because this global economic reset can become a strategic plus for India if we are able to see through this nicely.