Archives for: Analysis Category

Govt plans to close down Mahila Bank

01 August 2015 - 17:49 pm
 

Bharatiya Mahila Bank, (BMB) established by the previous government, is to be closed. The finance ministry is to approach  the Cabinet in a month with such a proposal.

Ministry sources said  this amid speculation that BMB would be merged with State Bank of India. Earlier, SBI chief Arundhati Bhattacharya had said: “I do not know the basis of this news and I have not been approached on this…I think this is something they are discussing at the Cabinet.”

She had said the country’s largest lender would not have a problem in amalgamating BMB, a small bank. Launched in 2013 with paid-up capital of Rs 150-200 crore, it has 60 branches across the country. The mandate was to cater for women.

 

real estate india

Typical of a recession, the last few quarters have witnessed developers across the country, and more so in the National Capital Region (NCR), go slow on launching new projects and instead focus on completion and delivery of existing projects. A report released by Knight Frank shows that the NCR is facing the biggest stress in real estate across the country with new launches and sales hitting a decade low.

While, housing sales in NCR fell by 50 per cent during first six months of this year, new home launches declined by 68 per cent over the corresponding period last year. Story across other seven major hubs — Mumbai, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad — is no better. >> Read More

 

Terming land acquisition as one of the “difficult acts” in India, NITI Aayog Vice Chairman Arvind Panagariya today said it can easily take up to 5 years for acquiring land for a large project including building of cities.

Availability of land is a big challenge and has become a big debate in the country, he said at a conference here on sustainable and inclusive urbanisation.

“If you want to build new cities, you need land and also large spaces are required for businesses to flourish and for that you need spaces within the existing cities,” he said.

“By all estimates that I have seen, it will easily take about up to 5 years for any acquisition of land to construct a city or something like that. That I am assuming that every step goes in smooth process without any challenges from NGOs, either judicial one or any kind of protest. So procedurally, it is a difficult Act,” Panagariya said.

The horizontal space is also scarce, he said, adding that one way to overcome this space problem is to construct vertically but there are issues with that as well.

He said Indian cities have chosen a policy of low floor space index (FSI) and which have resulted in high rentals.

“You also need orderly urbanisation. Rapid moving transport and dense network of transport is needed so that people can reach desired place in a smooth manner. It also allows people to live in larger spaces outside the main city,” he added. >> Read More

Surge in US Dollar on Card

01 August 2015 - 11:30 am
 

As a symbol of how the US punches above its weight, nothing beats the pre-eminence of its currency. The US may account for just a fifth of global gross domestic product, but dollar assets make up three times as great a proportion of global reserves. Most commodity trading uses the greenback as the medium of account.

This influence is telling. A working paper from the Bank of International Settlements found almost $8tn of dollar credit issued to non US borrowers. More recently the IMF pointed out how past episodes of dollar strength have coincided with a rash of emerging market crises. Now that the greenback is surging again — the dollar index is up 20 per cent since last autumn — the implications are moving into focus.

First, some perspective is in order. Although the dollar index rose from 80 in October to 100 in March, such price action is run-of-the-mill when examined over a longer period. Between 1981 and 1985, the same index soared from 90 to 160, before a co-ordinated international effort pushed it all the way back within three years.

Dissecting the dollar is something of an art; a bet on its strength can reflect confidence in the US, or darkening clouds elsewhere and a rush to safe assets. The same IMF paper has shown that rising US rates are beneficial when they reflect optimism about growth, but not if driven by tighter money. On many occasions dollar strength has coincided with fears about growth; last autumn, for example, a spell of global deflation may have helped propel the dollar on its recent run. Of late, attention has focused more closely upon how well the US is doing.

Indeed, it is striking how US monetary policy pays little direct attention to the dollar’s globe-trotting role. Peruse Federal Reserve statements, or recent comments by its chair Janet Yellen, and you will struggle to find much reference to the world beyond US borders. Ms Yellen is focused on the data, but the data in question is all domestic: unemployment, inflation and GDP. The global economy only matters insofar as it might impact upon the US. This week GDP revisions strengthened the chance of a rise in the rate some time before Christmas. >> Read More

Long positions in Treasuries look good

01 August 2015 - 10:50 am
 

Ihave seen Wall Street more panicked than it is now, but it is quite dispirited. There are just not enough good ideas out there, particularly in the dollar world, compared with the amount of cash that is ready to pounce on them.

So it is time to sell your least-favourite dollar risk assets and buy US Treasury 10-year notes, or, better yet, call options on US Treasury 30-year bonds. Hold the underweight equities/long Treasuries position for the next year to 18 months. Then buy the relative values that will be more apparent by then, particularly in the US oil and gas industry.

The problem with my advice, if you are a portfolio manager, is that it sounds as if you are asking the clients to pay you to manage your money while you just stand around and wait for something to happen. There is an element of truth to that. You, the manager, are reducing the risk of loss on your assets under management, but assuming a greater risk that your clients will redeem their money and allocate it to other managers who are more willing to go with the herd.

However, I think that “redemption risk” is worth taking, because the dollar world is already experiencing a deflationary crunch. When I say the “dollar world”, I am including China with its dollar-linked renminbi. Deflationary crunches are painful for leveraged equity owners.

Most professional investment managers are not prepared for that. They are trying to reduce their career risk by crowding even closer to the indices and consensus trades. That will not work.

>> Read More

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Revising its earlier prediction, private weather agency Skymet has lowered its monsoon forecast from 102 per cent to 98 per cent even as it maintained that the country will receive “normal” rainfall during the year.

It has also revised its prediction for July to 84 per cent as against the earlier forecast of 104 per cent.

Anything less than 90 per cent of the Long-Period Average (LPA) is termed “deficient” rainfall while 90-96 per cent of LPA is considered “below normal”. Again, rainfall at 96-104 per cent of the LPA is “normal” with 104 to 110 per cent taken to be above normal. Anything over that is “excess”.

Ninety-eight per cent is, however, on the “negative” side of normal monsoon.

“Taking cognisance of July rain, and the updated August and September forecast, we are revising the monsoon forecast to 98 per cent (normal) of the LPA from 102 per cent issued in April (error margin of plus/ minus 4 per cent).

“After an above normal June (plus 16 per cent), July is going to end with (minus 15 per cent). This is near normal, but less than our initial forecast (plus 4 per cent). >> Read More

http://www.sebi.gov.in/cms/sebi_data/attachdocs/1438347631669.pdf

 

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Technically Yours,
Team ASR,
Baroda, India.