I just read an article that talks about "Why India could be a superpower" despite current gloomy situation in Indian economy. This article is written by William H Avery, a former American diplomat and is the author of "China's Nightmare, America's Dream: India as the Next Global Power"; the article is published by Economic Times.
This article tries to explain why you shouldn't be crying fault due to current gloomy situation of Indian economy against growing China's might. And of course what we can think of when we think in context of Indian stock markets is that, the same old phrase, believe in India's long term growth story to make money from investments.
Without much ado, here is the article. Why 21st century can well be India's
Showing posts with label World Economy. Show all posts
Showing posts with label World Economy. Show all posts
India Finds Support from Japan to Shore Up Liquidity Concerns in 2012
2011 will go down in history as a year filled with economic uncertainty, creating undercurrents of volatility that rocked financial markets both to and fro. For emerging economies, like India and its other “BRIC” brethren, a ”ripple” in Europe or North America can easily transform into a “tsunami-type” wave bent on destruction by the time it reaches domestic shores. Many experts are predicting a repeat performance in 2012. The time is now to build fortifications to withstand the onslaught to come.
Government officials for India and Japan have already been hard at work preparing for potential storms of an economic nature. Recent press releases confirm that a $15 billion currency arrangement has been reached, as well as agreement to work cooperatively on many projects that should benefit trade for both countries.
The currency swap deal will provide a liquidity backstop for the Indian government should the crisis in Europe put undue pressure on global credit sources in the year ahead. The latter cooperative effort will provide long-term stability by enabling more trade to pass easily to both Europe and Africa from Indian companies, as well as from the more than 800 Japanese entities with active operations in India.
Background
The world today is interconnected by global commercial flows that are difficult to comprehend. When “ripples” occur in the commercial fabric, they can have major impacts on a country’s financial standing. The diagram below will help to reveal a few of these global interdependencies that must be accommodated when the equilibrium is disturbed:
Exchange-Traded Funds offer a wealth of pricing data that when compared can demonstrate how interconnected our global commerce engine is today. The “Blue” line is a proxy for the India stock market, whereas the “Red” and “Violet” lines represent Europe and the United States for the past twelve months. The “Green” line has been added to illustrate the trend of the Rupee as events transpired during the year.
A few conclusions that can be drawn from this data are:
The one positive signal at the end of 2011 was that the U.S. economy was beginning to stage a modest economic recovery, hopefully, strong enough to withstand further problems in the European sector. The challenge for Indian officials will be to manage its current growth objectives without depleting its balance of foreign currency reserves. The pact with Japan should provide a protective “cushion” in case debt markets tighten in the foreseeable future.
It is well known that India has many infrastructure projects on the drawing board that will attract foreign capital to its coffers. The population demographics are also favorably young with internal consumption on the rise, such that experts agree that the economy is poised for long-term growth. If short-term demands can be managed, long-term prosperity awaits.
About the author
Tom Cleveland is a writer and currency analyst for ForexTraders, an online resource for the foreign exchange market and currency news. He has over 30 years of experience in executive management, corporate governance and business development, having served as CFO for various Visa International entities from 1980 until his retirement in 1999.
Government officials for India and Japan have already been hard at work preparing for potential storms of an economic nature. Recent press releases confirm that a $15 billion currency arrangement has been reached, as well as agreement to work cooperatively on many projects that should benefit trade for both countries.
The currency swap deal will provide a liquidity backstop for the Indian government should the crisis in Europe put undue pressure on global credit sources in the year ahead. The latter cooperative effort will provide long-term stability by enabling more trade to pass easily to both Europe and Africa from Indian companies, as well as from the more than 800 Japanese entities with active operations in India.
Background
The world today is interconnected by global commercial flows that are difficult to comprehend. When “ripples” occur in the commercial fabric, they can have major impacts on a country’s financial standing. The diagram below will help to reveal a few of these global interdependencies that must be accommodated when the equilibrium is disturbed:
Exchange-Traded Funds offer a wealth of pricing data that when compared can demonstrate how interconnected our global commerce engine is today. The “Blue” line is a proxy for the India stock market, whereas the “Red” and “Violet” lines represent Europe and the United States for the past twelve months. The “Green” line has been added to illustrate the trend of the Rupee as events transpired during the year.
A few conclusions that can be drawn from this data are:
- Stocks tend to be more volatile than currencies;
- Emerging economy stock markets tend to be more volatile than those for major economic powers. If a line had been inserted for Brazil, it would have behaved similarly to India, yet not nearly as steep a decline at the end of the year since it does not have an import/export trade imbalance as does India;
- India was grappling with weaker demand from Europe during the first half of the year, but when the debt crisis in Europe escalated in the latter half, Indian stocks plummeted;
- Falling stock values highlighted anticipated drops in exports, the primary reason for the Rupee depreciating nearly 15% in six months. The depreciating currency has also led to “capital flight” as investors have repatriated local investments.
The one positive signal at the end of 2011 was that the U.S. economy was beginning to stage a modest economic recovery, hopefully, strong enough to withstand further problems in the European sector. The challenge for Indian officials will be to manage its current growth objectives without depleting its balance of foreign currency reserves. The pact with Japan should provide a protective “cushion” in case debt markets tighten in the foreseeable future.
It is well known that India has many infrastructure projects on the drawing board that will attract foreign capital to its coffers. The population demographics are also favorably young with internal consumption on the rise, such that experts agree that the economy is poised for long-term growth. If short-term demands can be managed, long-term prosperity awaits.
About the author
Tom Cleveland is a writer and currency analyst for ForexTraders, an online resource for the foreign exchange market and currency news. He has over 30 years of experience in executive management, corporate governance and business development, having served as CFO for various Visa International entities from 1980 until his retirement in 1999.
European and US stock markets crash today...again
Just after a day of relief, worldwide stock markets have started the downward journey again. Dow Jones has fallen more than 500 points today. The reason? European bank crisis is spreading. Watch out for Indian Stock Markets too.
The Dow Jones industrials were down more than 530 points before the close today. Gold has hit December delivery at $1,801 an ounce. This is first time that Gold has crossed $1,800.
The two main concerns were crashing European and especially French bank stocks. The other major concern, weak American economy.
The French banking stocks crashed on worries that there are deep problems within French banking system. French government has proposed to consider new tax increases, spending cuts and other budget measures for deficit reduction.
These developments and crashing European/American stock markets would certainly further destabilize Indian Stock Markets. It would be advisable for long term investors to not to buy stocks at this moment and be in wait and watch mode. Certainly there would be buying opportunities when they can buy good stocks at reasonable valuations.
The Dow Jones industrials were down more than 530 points before the close today. Gold has hit December delivery at $1,801 an ounce. This is first time that Gold has crossed $1,800.
The two main concerns were crashing European and especially French bank stocks. The other major concern, weak American economy.
The French banking stocks crashed on worries that there are deep problems within French banking system. French government has proposed to consider new tax increases, spending cuts and other budget measures for deficit reduction.
These developments and crashing European/American stock markets would certainly further destabilize Indian Stock Markets. It would be advisable for long term investors to not to buy stocks at this moment and be in wait and watch mode. Certainly there would be buying opportunities when they can buy good stocks at reasonable valuations.
Downgrade of US credit rating - Whats ahead for Indian stock markets
BSE SENSEX has nosedived by 5% in past one week, thanks to shaken world stock markets in fears of US sovereign debt and S&P’s downgrade of US credit. On Friday, S&P’s has finally downgraded the US credit rating from AAA to AA+. So what’s going to happen in Indian stock markets when they open on Monday morning? Let’s try to guess it..
S&P has downgraded US credit rating form AAA to AA+. First time in history, US credit rating has been downgraded. US as a country has definitely been shaken by this S&P’s move.
S&P's managing director John Chambers says on Sunday that there is a one in three chance of a further US credit rating downgrade over the next six months to two years. "We have a negative outlook ... from six months to 24 months and if the fiscal position of the US deteriorates further or if the political gridlock becomes more entrenched, then that could lead to a downgrade. The outlook indicates at least a one in three chance of a downgrade over that period."
World has certainly been shaken inside out and it clearly visible by early trades in Asian stock markets which are bleeding in RED.
But American leaders and economists are not hugely concerned due to S&P’s downgrading as they are sure that US will not get into double dip recession. US would certainly recover soon to walk on growth path, it’s just that it may take some more time.
I think Indian stock markets today would open in red, with a gap on lower side but may try to recover in the day. On the longer side, Indian stock markets may remain volatile for at least may be couple of months. Also, we may see some earnings downgrading and so sell off in Indian stocks in near term that could take SENSEX and Nifty downwards. how much? We can only guess. Maybe 16000? or even lower?
But I guess Indian stock markets will soon be near it’s bottom and that most of the stocks are available at good to attractive valuations levels. Though India has got it's own set of problems to deal with in terms of rising inflation, political concerns and investments hurt due to corruption woes. These things and government's response to them would matter in near future much more for sure.
Small investors like you and me don’t need to rush in this carnage and make long term investing decisions in hurry. One should wait for some time, find good stocks to buy and start buying stocks in small quantities at every dip for long term portfolio. Keep visiting IndianStocksNews.com in next few weeks as I would be posting analysis of some good small cap, mid cap and large cap stocks to buy for long term.
S&P has downgraded US credit rating form AAA to AA+. First time in history, US credit rating has been downgraded. US as a country has definitely been shaken by this S&P’s move.
S&P's managing director John Chambers says on Sunday that there is a one in three chance of a further US credit rating downgrade over the next six months to two years. "We have a negative outlook ... from six months to 24 months and if the fiscal position of the US deteriorates further or if the political gridlock becomes more entrenched, then that could lead to a downgrade. The outlook indicates at least a one in three chance of a downgrade over that period."
World has certainly been shaken inside out and it clearly visible by early trades in Asian stock markets which are bleeding in RED.
But American leaders and economists are not hugely concerned due to S&P’s downgrading as they are sure that US will not get into double dip recession. US would certainly recover soon to walk on growth path, it’s just that it may take some more time.
I think Indian stock markets today would open in red, with a gap on lower side but may try to recover in the day. On the longer side, Indian stock markets may remain volatile for at least may be couple of months. Also, we may see some earnings downgrading and so sell off in Indian stocks in near term that could take SENSEX and Nifty downwards. how much? We can only guess. Maybe 16000? or even lower?
But I guess Indian stock markets will soon be near it’s bottom and that most of the stocks are available at good to attractive valuations levels. Though India has got it's own set of problems to deal with in terms of rising inflation, political concerns and investments hurt due to corruption woes. These things and government's response to them would matter in near future much more for sure.
Small investors like you and me don’t need to rush in this carnage and make long term investing decisions in hurry. One should wait for some time, find good stocks to buy and start buying stocks in small quantities at every dip for long term portfolio. Keep visiting IndianStocksNews.com in next few weeks as I would be posting analysis of some good small cap, mid cap and large cap stocks to buy for long term.
DOW Plunges 512 Points on Thursday
Dow nosedived 512 points today as American stock markets witnessed it’s biggest fall since the stock market crash of 2008 since people are wary of global economy.
The stimulus in US seems to be just not working and that the US economy is heading back into recession.
People are basically fearing for global economic slowdown again due to recent economic weak data. Jobless claims on Thursday morning showed large number of American are unemployed and that unemployment rate is not going to reduce anytime soon from 9.2%.
Investors on Wall Street are waiting for Friday’s jobs report. Japan's government has stepped in to weaken the yen, and the European Central Bank has decided to re-enter the European bond markets for the first time since March 2011.
All the three major indexes plunged more than 4% today and entered into 'correction' territory which is defined as a 10% drop from recent highs. The Dow, Nasdaq and S&P 500 are down more than 10% from their mid-July highs now.
The market’s fear gauge was indicating 30.5 which is high degree of fear!
Looking at these developments, where do you think Indian stock markets on Friday would head? Southwards is the only answer comes to my mind. And if they follow the same path of 4%, we could see the SENSEX around 17000 mark today!
The stimulus in US seems to be just not working and that the US economy is heading back into recession.
People are basically fearing for global economic slowdown again due to recent economic weak data. Jobless claims on Thursday morning showed large number of American are unemployed and that unemployment rate is not going to reduce anytime soon from 9.2%.
Investors on Wall Street are waiting for Friday’s jobs report. Japan's government has stepped in to weaken the yen, and the European Central Bank has decided to re-enter the European bond markets for the first time since March 2011.
All the three major indexes plunged more than 4% today and entered into 'correction' territory which is defined as a 10% drop from recent highs. The Dow, Nasdaq and S&P 500 are down more than 10% from their mid-July highs now.
The market’s fear gauge was indicating 30.5 which is high degree of fear!
Looking at these developments, where do you think Indian stock markets on Friday would head? Southwards is the only answer comes to my mind. And if they follow the same path of 4%, we could see the SENSEX around 17000 mark today!
Marc Faber: U.S. debt crisis in next 5 to 10 years
I just read an article on Digital Journal on the topic of United States Debt. Actually it is an article stating forecast from world famous economic forecaster and “Mr. Doom” himself, Marc Faber.
I am trying to figure out the next course of stock markets,like everyone else in the world is trying to do, just to protect my investments from "crashes" and may be; to be prepared for next big opportunity.
I am reproducing this article as it is, for reference purpose only. I strongly believe, the financial crisis is not over. It is going to be a multi-year affair with some ups and downs periodically. Just as in 2008-2009 it was American financial crisis, Dubai financial crisis in 2009 and recent 2010 European debt crisis, which I believe is just a beginning in Europe. The amount of debt on many of the countries is just bulging every day. I found an interesting US Debt Clock which tries to display US debt and associated figures real time. Check this out. As I am writing this article, the figure is astonishing 13.15 Trillion US Dollars. The way to get out of this debt is literally to "print money". But this would lead to a crash in value of that currency which again would lead to a financial crisis.
Here is the article from Digital Journal.
The United States debt is more than $12 trillion and financial guru Marc Faber believes the country will see the consequences of that within the next five to ten years through defaulting on their debt, most likely by printing large quantities of money.
On Wednesday, economic forecaster and “Mr. Doom” himself, Marc Faber, spoke to "Tech Ticker" about the state of the current economic downturn within the United States and, in original fashion, stated that he doesn’t see much hope for the US economy because of its major debt crisis it will face, according to Yahoo! Finance. Faber, publisher of Gloom Boom Doom, said the US won’t see a debt crisis next year or the year after but within the next five to ten years.
Faber explained that every financial crisis there’s a sovereign debt problem because countries borrowed large amounts of money during the boom from other nations and then when there is a downturn, such as the current one, they have a hard time to back their lenders.
Most countries that will blow up will be the “PIIGS,” which are Portugal, Ireland, Italy, Greece and Spain and he expects that at least one of them will default in the next couple of years. If that does truly happen then it will be the death of the Euro.
According to the Business Insider, when it comes to the US, Faber believes the two main problems when it comes to destroying the US Dollar are the ballooning debt and the future interest costs, which amounts to 12 per cent of the government’s tax revenue but he expects it to largely increase to 35 per cent.
The only solutions the government has, according to Faber, will be to cut spending, which he finds unlikely to happen, or print money at astronomical levels.
Digital Journal reported on Thursday that Jim Rogers, Chairman of Rogers Holdings, strongly criticized Jim Chanos’ prediction that the Chinese economy will collapse. Rogers said a guy like Chanos “couldn’t spell China 10 years ago and now they’re experts.”
GuruFocus reports that Faber does believe the Chinese economy will collapse because of its excessive credit but it won’t be for quite some time. “It is very difficult to pinpoint a day when China will implode; I don’t think it will happen right away.”
I am trying to figure out the next course of stock markets,like everyone else in the world is trying to do, just to protect my investments from "crashes" and may be; to be prepared for next big opportunity.
I am reproducing this article as it is, for reference purpose only. I strongly believe, the financial crisis is not over. It is going to be a multi-year affair with some ups and downs periodically. Just as in 2008-2009 it was American financial crisis, Dubai financial crisis in 2009 and recent 2010 European debt crisis, which I believe is just a beginning in Europe. The amount of debt on many of the countries is just bulging every day. I found an interesting US Debt Clock which tries to display US debt and associated figures real time. Check this out. As I am writing this article, the figure is astonishing 13.15 Trillion US Dollars. The way to get out of this debt is literally to "print money". But this would lead to a crash in value of that currency which again would lead to a financial crisis.
Here is the article from Digital Journal.
The United States debt is more than $12 trillion and financial guru Marc Faber believes the country will see the consequences of that within the next five to ten years through defaulting on their debt, most likely by printing large quantities of money.
On Wednesday, economic forecaster and “Mr. Doom” himself, Marc Faber, spoke to "Tech Ticker" about the state of the current economic downturn within the United States and, in original fashion, stated that he doesn’t see much hope for the US economy because of its major debt crisis it will face, according to Yahoo! Finance. Faber, publisher of Gloom Boom Doom, said the US won’t see a debt crisis next year or the year after but within the next five to ten years.
Faber explained that every financial crisis there’s a sovereign debt problem because countries borrowed large amounts of money during the boom from other nations and then when there is a downturn, such as the current one, they have a hard time to back their lenders.
Most countries that will blow up will be the “PIIGS,” which are Portugal, Ireland, Italy, Greece and Spain and he expects that at least one of them will default in the next couple of years. If that does truly happen then it will be the death of the Euro.
According to the Business Insider, when it comes to the US, Faber believes the two main problems when it comes to destroying the US Dollar are the ballooning debt and the future interest costs, which amounts to 12 per cent of the government’s tax revenue but he expects it to largely increase to 35 per cent.
The only solutions the government has, according to Faber, will be to cut spending, which he finds unlikely to happen, or print money at astronomical levels.
Digital Journal reported on Thursday that Jim Rogers, Chairman of Rogers Holdings, strongly criticized Jim Chanos’ prediction that the Chinese economy will collapse. Rogers said a guy like Chanos “couldn’t spell China 10 years ago and now they’re experts.”
GuruFocus reports that Faber does believe the Chinese economy will collapse because of its excessive credit but it won’t be for quite some time. “It is very difficult to pinpoint a day when China will implode; I don’t think it will happen right away.”
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