After a final showdown with Chicago, Tokyo and Madrid, Rio is successfully voted to stage the Olympics games in 2016. This is another feather in the cap of an emerging economy and part of BRIC. The pitch of first in South America was well received by the voting comittee and surely a victory for emerging economies and a post economic crisis world.
Though it was anticipated, when the event happened it was combined with multiple jolting news. Lehman, Merill and then AIG starving for capital all said one thing ” Its Down”. Its no longer a sub prime issue or housing issue,..its all about main street issues which is that ” Is there a fundamental crisis ?” You bet !
What can the BRIC countries learn from this ?
Sustainable growth is more valuable than Greed based growth. Russia seems to be getting into trouble too. India and China should watch out before it is too late. Everyone is affected by the liquidity crisis in the Inter Bank systems. The key is jobs creation and investment into all infrastructure projects. Financial Institution will squareup all their issues and will start chasing viable projects.
So what if there is no Lehman and Merill in this world,..these institutions didn’t get it right with the changing scenarios. Anybody could have sensed the housing bubble in US but then they all said it doesn’t happen in America.
Some report from Barclays Bank says that inflation will reach 17% in India. A former economist says one of the big bank is in big time trouble and is expected to declare bankruptcy in next 3 months or so.
Taking cues from the global markets, the sensex is more tanking and if you ask the traders there is no activity at all as everyone is squaring too quickly.
Real Estate activity has cooled off, small builders are facing the interest burden and are not able to offload their inventory. Banks have started financing new products,..like the iphone in India.
It is a recession card played everywhere. Real test of the inflationary pressure will be seen during Diwali festival time and thats a checkpoint for real estate prices too.
India, along with emerging market peers China, Brazil and Russia, is expected to transform the global business landscape and will have a greater influence on the markets across the world by 2018, a study says.
The study by UK-based Chartered Management Institute looking ahead to 2018, predicted what the world of work and management would look like and examined how organisations can prepare for it.
“In the probable future, Brazil, Russia, India and China (BRIC) nations will have a greater influence on business markets and transform the business landscape,” the study said in its description of the the most probable picture of the world of work and management in 2018. Read the rest of this entry »
The Wall Street was quite nervous after the bailing out of Bear Sterns by Federal Reserve. There is genuine fear of further pull down of the market.
The Economic Times reports :
With a deal in place to save Bear Stearns from bankruptcy, the company’s shares traded above the offer price Monday even as investors began turning a critical eye to other investment banks amid worries about how far the credit contagion could spread.
Despite the weekend deal in which JPMorgan Chase & Co bought Bear Stearns for a fraction of its value last week, worries that other banks had sizable exposure to troubled credit markets sent global markets tumbling. Wall Street managed to rally from sharp losses Monday as investors went bargain-hunting.
A complete collapse of Bear Stearns might have completely crushed the already-dwindling confidence in the global financial system, which has frozen up after last year’s collapse of the subprime mortgage market.
Bear Stearns was the most exposed to risky bets on the loans; it is now the first major bank to be undone by that market’s collapse. But the fact that a major investment bank could reach the verge of buckling — and be sold at such a discount — sent dismay through Wall Street and beyond.
As the economy grows in India despite US slowdown, Salaries are set to be raised once again.
India is likely to top salary hikes in Asia for a fifth year in 2008, but Companies in India are finding it hard to retain talent, a new survey said Tuesday.
Indian salaries are expected to rise by an average 15.2 percent in 2008 after rising 15.1 percent last year, according to an annual survey conducted by global human resource company Hewitt Associates.
Real estate and energy Companies were seen offering the biggest hikes of 25 percent and 17.5 percent respectively.
China is expected to come in second with projected raises of about 8.5 percent, followed by the Philippines with 8.3 percent, the survey said.
However, the high salary growth is fueled by a talent demand and supply mismatch, it said.
The world may fret over a possible US recession but the strong economies of India and China can act as “two engines of growth” to counter its global effects, India’s Commerce Minister Kamal Nath said here Wednesday.
Nath, who is in a power-packed Indian delegation of 80 at the annual meeting of the World Economic Forum (WEF) in this snow-clad Swiss mountain resort, also coupled his comments with guarded optimism over the stalled Doha Round of trade talks.
“I am optimistic this Davos will create a greater momentum towards conclusion,” Nath said, referring to process to restart talks at the World Trade Organisation (WTO) that have made little headway due to charges of protectionism by rich and developing nations.
“I am also realistic that there is an election in the US. I am realistic that Europe is in a new phase of protectionism,” he said, even as he sought to spell out the importance of India and China to the world economy today.
“This is the first time the world is looking at a possible recession with two engines of growth - India and China,” he said, in the first significant comment by a political leader to the 2,500 delegates gathered here.
“No economy can totally decouple itself from the US.”
Although the US economy consumed goods and services worth $9.5 trillion last year, Nath said it would be important to see how much of that was wiped out by the “current crisis”.
But with greater South-South trade between developing countries, particularly India and China, he said “the magnitude of the trade can’t be the same as in the past.” Read the rest of this entry »
India is next to US and Switzerland in terms of intangible assets. In today’s world intellectual capital, customer relationship, brand and mature financial markets play an upper role than fixed assets, land, machinery etc..
The sub prime issue is entering the mainstream economy and its no longer just a wall street issue. Every aspects of economy is going to get affected. At this juncture big cos like Citigroup are having a leadership issue as well. It will take humongous effort from the new leadership to steer the boat in the right direction.
Greg Morcoft of Market Watch Reports
Goldman Sachs analyst William Tanona on Monday recommended that clients sell Citigroup shares, because the bank’s financial problems are likely to grow, and spread beyond current write downs for subprime mortgage losses and into its consumer business like credit cards and retail banking.
He said, those issues, combined with an ongoing search for a new CEO and growing concern about possibly having to trim its dividend preclude any “quick fix” for the shares.
“The lack of leadership at this point in Citi’s storied history could not have come at a worse time. With deteriorating consumer and housing metrics, Citigroup is facing mounting pressure across many businesses,” Tanona said.
He estimates that the firm will end up taking a total of about $15 billion to write down the value of collateralized debt obligation (CDOs), a type of derivative debt security popularized in recent years and used to market mortgage loans to investors.
CDOs are a bit like mutual funds that hold asset-backed securities. The products are then sliced up and sold to institutional investors. Some CDOs have been big buyers of subprime mortgage-backed securities. As subprime delinquencies surged this year, rating agencies have been downgrading some CDOs and their market value has slumped.
Citi has already announced plans to write down as much as $11 billion in CDO exposure to date.
Citi shares fell almost 6% $32.
Citi shares have fallen 40% so far in 2007, and almost 30% in the last several months, but Tanona said further declines are likely as earnings slow. Read the rest of this entry »
Sensex has touched almost 20000, though this number is arrived out performance of 30 big companies listed on the exchange. Some of the stocks are quoted on a all time high basis but still investors want a pie in these India based equities. Fundamentally speaking there is growth there and any growth in earnings will take the stock price high with a favourable macro economic factors.
Stocks on Indian bourses may be commanding huge PE (price-to-earnings) multiples, but for brokers and investors they translate into an ‘extra price’ they pay for higher returns on investments.
A dipstick study, conducted to see how well-priced desi blue chips are vis-a-vis their peers in developed and emerging markets, reveal that Indian shares are far more expensive (in terms of PE multiples) than global majors with better revenues and adjusted profits.
To make a point, L&T with a trailing PE of 56 times is far more ‘expensive’ than engineering behemoth GE (18) or a Mistubishi (13). Likewise, ICICI commanding a PE of 41 times is far more expensive than Citigroup (9) and BNP Paribas (8). IT major Infosys with a trailing PE of 24 is undoubtedly valued higher than EDS (13.8) and Oracle (20). PE gives investor an idea as to what the market is willing to pay for the company’s earnings. The higher the PE the more the market is willing to pay for the company’s earnings. PE, as an indicator, helps investor in deciding whether he should invest in a particular stock or not. A scrip trading at a PE of 15-18 times is generally regarded as a ‘fairly valued’ stock across markets, provided the company has decent earning potential.
Economies 2.0