A country’s market capitalization as a percent of GDP is a useful indicator in assessing whether an equity market is under- or overvalued. Making direct comparisons between developed markets and emerging markets can be difficult, however, because the latter tend to have less developed stock markets and lower market capitalization to GDP ratios. A more useful indicator is to compare a country’s ratio to its historic levels. Based on current differences from previous 10 year averages, European markets, especially Italy, Spain, and France, appear particularly undervalued and therefore attractive. Additionally, the BRICs (Brazil, Russia, India, China) countries are currently below their averages, suggesting now may be a good buying opportunity.
Largely unaffected by the recent carnage in stock markets, salt-to-software conglomerate Tata Group is closing in on to become the country’s first business house to attain a market valuation of Rs 6 lakh crore.
The cumulative market capitalisation of all 32 listed companies of the Tata group has risen to nearly Rs 5.90 lakh crore as on Friday– the highest for any business house in the country and almost double the market value of the second ranked Mukesh Ambani-led Reliance Industries Group. The total market value of Tata group exceeds the combined market capitalisation of at least three leading business houses in the country — Mukesh Ambani-led RIL group (about Rs 2.75 lakh crore), Kumar Mangalam Birla-led Aditya Birla Group (about Rs 1.5 lakh crore) and Anil Ambani-led Reliance Group (about Rs 62,000 crore).
Interestingly, the Tata group’s market value has grown substantially over the past one year, including in the past a few months when the overall stock markets have been facing strong headwinds and have lost value. In the past three months, the Tata group’s valuation has grown by over Rs 80,000 crore or over 15 per cent, while the total valuation of Indian markets has actually fallen by about 10 per cent during the same period, shows an analysis of data available from stock exchanges. Read More
Everbright Securities’ fat finger trade in Shanghai on Friday could cost the Chinese brokerage up to Rmb400m ($65.4m), or up to 2 per cent of its equity base, according to estimates by Citi analysts.
Everbright Securities sparked an over 5 per cent flash rally last Friday when it accidentally put through an Rmb7bn trade by its prop trading desk.
Based on that size trade and an estimated 5 per cent trading loss base on the day’s market volatility, Citi’s Paddy Ran says the brokerage could have lost Rmb300-400m, up to 20 per cent of its pre-tax profit for 2012. For China Everbright, a Hong Kong-listed group that holds 33 per cent of Everbright, that could mean it shares the loss to the tune of Rmb90-102m, around 6-7 per cent of pre-tax profit in 2012.
China Everbright lost 5.5 per cent on Friday and is down a further 1.1 per cent today. Everbright Securities in Shanghai is suspended today. Read More
Mind Over Markets, the book that popularized (and expanded on) Peter Steidlmayer’s Market Profile, was first published in 1990. Anyone who bought the book expecting a self-help manual would have been sorely disappointed because what they got instead was a pretty complicated alphabetic model for organizing the distribution of market data along price and time axes. Twenty-three years later James F. Dalton, Eric T. Jones, and Robert B. Dalton are back with an updated edition of their text, Mind Over Markets: Power Trading with Market Generated Information (Wiley, 2013).
The book itself is organized according to the Market Profile trader’s achievement level—novice, advanced beginner, competent, proficient, and expert—with the greatest time spent on the competent level. The expert trader gets a mere two pages. Read More
15 years ago as middle aged traders on Dalal Street, we saw the emergence of stalwarts like Dr RH Patil and some techies like Jignesh Shah of Financial Technologies. People used to talk in whispers how the Rs 40 stock of FT would make billionaires many times over for Indian investors. The reason was simple, just like Microsoft, FT’s NISE was the only licensed stock trading platform permitted for use on the NSE terminals. The meteoric rise of the NSE and consequently NISE made Jignesh Shah one of the youngest billionaires in the country,
Good things do not last for too long in a country run by crooks. In some ways FT’s undoing was to promote a parallel commodities and equities exchange under the acronym MCX-jointly promoted by NABARD and a host of other GOI bodies. It had a successful issue with the IPO listing at Rs 1400 on Day 1. Today the scrip is locked at a lower circuit of rs 150 alongside promoter FTs stock which has lost about 70 per cent of it’s market cap in 2 days.
Why? The GOI in a most characteristic cavalier move asked MCX to square all forward contracts on the exchange and for others they reduced them to delivery trade. So much so that no intra-day squaring is allowed unless the first trade was to have been long in any commodity, metal or stock.
There is a near certainty now that the MCX, FT and NSEL will either be taken over by the GOI or will go under receivership. If this happens, the UPA 1 and 2 would accomplished what few governments have done in 65 years. A lower circuit on the NSE/BSE, an upper circuit on the BSE/NSE and a closure of a parallel exchange.
What beats everyone that if Gold is the only problem affected the FX position of India, why are currency futures being permitted on the NSE. They should have been the first to have been banned, But no sir, larger forces are at play. It is inconceivable for a person without roots to dream of becoming a billionaire in India. That my dear friends rests with politicians and their chums from Sanawar, Doon, Mayo, Scindia and Bishop Cotton.
Habil Khorakiwala’s magnum opus hast ruled one time at a massive market cap of roughly Rs 20,000 crore . That was in February 2013-how the stars change. In July it has lost half it’s market cap-worst it has left with Mr. Khorakiwala a truncated market cap of about Rs 9000 crore and his personal wealth has dropped to Rs 7400 crore.
Small indiscretions like plant cleanless are dealth severely by the USFDA and the UKMHA. While the management can downplay import alerts the fact is that quite possibly the 3 month inventory in the UK and US will have to be recalled and the the three month pipeline at Waluj will have to be written off. So losses are unquantifiable. And if the stock had been moved by the operators from Rs 200 to Rs 2000 in one year, they can easily help it bring it down to starting point entailing huge losses to the promoter. Read More
I was doing some evening reading and came across this interesting letter from Howard Buffett,Warren Buffett’s dad. Howard had a huge impact on Warren’s life so it was surprising to read his stance on gold. In essence, Howard was a raging gold bug who stated that “paper systems end in collapse” and believed that the government’s debt from WW2 was spiralling out of control and posed a massive problem. He also believed that the fiat system was the equivalent of surrendering “your children and your country to galloping inflation.”
The reason I find all of this so interesting is that no person on earth has single handedly benefited from fiat money more than Howard’s son Warren. Yes, inflation has risen substantially since 1948 when he wrote that letter, but American living standards have exploded far higher than the rate of inflation. In the meantime, few families have benefited from fiat money more than the children and grandchildren of Howard Buffett.
Even more interesting to me, is Warren’s rejection of his father’s beliefs on the way to becoming the world’s biggest beneficiary of fiat money. Warren not only understands the silliness of building a portfolio around commodities, but he also clearly understands that the national debt does not pose some form of solvency problem in the same sense that a business or household is constrained by.
Multi-unit, multi-location CRAM and injectables producer Jubilant Life has been significantly affected by the INR Depreciation. The corporate carries FX Debt of approximately $ 800 mn taken well before the INR fell 45 per cent in a year against the USD. There are two issues which affect the company. One, there will be a Rs 360 crore hit on FX losses, but these are likely to be capitalised and the second part is the USD 70 mn that is coming up for redemption.
Capitalising FX losses can end up help Jubilant report better finances but operationally the corporate will be crippled as FX mismatches of inflows and outflows reduce hedging options, but cash flows will not be protected.
FX exposure is the biggest reason for Jubilant under-performance, in addition to the USFDA targeting the Halifax facility for non compliance set standards of production. These are the reason for the stock to lose 50 per cent of it’s market cap in ayear, as against all it’s competitors who have seen their stocks appreciate with the USD.
Big Tobacco in the US is raising its bet on the growth of electronic cigarettes to offset the decline of traditional smoking with Reynolds American, the maker of Camel and Pall Mall launching its first smokeless, battery-powered device.
Reynolds, the second-biggest US tobacco company by market share, has hailed e-smoking as a “game-changer” for the industry, with chief executive Dan Delen on Thursday calling the launch a “fantastic business opportunity”.
Reynolds’ move comes as the industry steps up its investment in alternatives to traditional cigarettes. Marlboro-maker Altria, the biggest US manufacturer with about half of the US’s market share, plans to launch its own e-cigarette this year. Lorillard was the first big manufacturer to enter the US electronic market last year with the acquisition of Blu Ecigs for $135m.
Goldman Sachs estimated that the electronic cigarette sector generated sales of about $300m in 2012 while analysts predict that revenues will reach $1bn in the next few years – a fraction of the $90bn US cigarette market but one of the few areas where sales are growing. Read More