Bharat Heavy, Infosys, Satyam, Sobha: India Equity Preview

Feb. 24 (Bloomberg) -- The following companies may have unusual price changes in India trading. Stock symbols are in parentheses and share prices are as of close on Feb. 20. Markets were shut yesterday for a holiday.

The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 2.2 percent to 8,843.21. The S&P CNX Nifty Index on the National Stock Exchange declined 1.9 percent to 2,736.45. The BSE 200 Index retreated 2.1 percent to 1,044.06. SGX CNX Nifty futures for February delivery dropped 1.2 percent to 2,692 at 10:46 a.m. in Singapore today.

Overseas investors sold a net 3.2 billion rupees ($64 million) of Indian stocks on Feb. 19, according to the nation's market regulator.

Bharat Heavy Electricals Ltd. (BHEL IN): India's biggest power equipment maker won a 31.5 billion rupee order to supply generating units to a project in central India. The shares fell 1.4 percent to 1,364.10 rupees.

Infosys Technologies Ltd. (INFO IN): The nation's second- largest software developer is evaluating BCC and Ciber Novasoft, European providers of services based on SAP AG's software, as acquisition targets, the Economic Times reported yesterday, citing two unidentified persons familiar with the discussions. The shares retreated 2.6 percent to 1,177.15 rupees.

Satyam Computer Services Ltd. (SCS IN): The Indian software provider at the center of the nation's biggest corporate fraud inquiry will seek approval from regulators next week for its plan to sell a stake to a strategic investor. The company said it won orders worth $250 million in the last seven weeks. Satyam fell 1.4 percent to 45.55.

Sobha Developers Ltd. (SOBHA IN): The Indian real estate developer had its stock rating downgraded to "underweight" from "equal-weight" and had its price target cut 79 percent at Morgan Stanley, citing weak demand. Sobha slid 0.9 percent to 80.60 rupees.

Tata Power Ltd. (TPWR IN): India's biggest electricity generator outside state control may not bid for projects that can generate 4,000 megawatts of electricity. Raising funds in the current situation is difficult, said Banmali Agrawala, executive director. Tata Power fell 1.9 percent to 737.9 rupees.

UltraTech Cement Ltd. (UTCEM IN): India's second-biggest producer of the material had its rating raised to "equal- weight" from "underweight" at Morgan Stanley. The shares declined 0.5 percent to 416.95.

Indian Railways Scraps Joint Venture Plans for Factories

Feb. 23 (Bloomberg) -- Indian Railways, the state-run network that carries 15 million people daily, abandoned joint venture plans for factories to make locomotives and railcars after failing to identify partners.

The monopoly will now build the factories on its own, Home MinisterPalaniappan Chidambaram told reporters after a cabinet meeting in New Delhi today.

General Electric Co.'s India unit had planned to build a diesel engine factory in collaboration with Indian Railways and state-run Bharat Heavy Electricals Ltd. if it won the contract for the program.

Indian Railways is seeking to add trains to carry more freight and passengers in the world's second-most populous nation as more of its 1.2 billion people traverse the seventh- biggest country by area.

The cabinet approved the setting up of a diesel locomotive factory at Marhowra, Bihar, as a fully owned unit of the Indian Railways at a cost of 20.5 billion rupees ($413 million), the minister said. The factory will make 150 locomotives a year.

Indian Railways will also build a wholly owned railcar plant at Rae Bareilly in Uttar Pradesh with an investment of 16.85 billion rupees, Chidambaram said. The factory will build 1,000 railcars a year.

The cabinet also approved the proposal by Indian Railways to set up a factory as a "departmental production unit" to build electric locomotives at Madhepura in Bihar state, following a failed bid to attract joint venture partners.

"In response to the Ministry of Railways Request for Proposals, only one, non-compliant bid was received," the government said in a release today. "Bidders have represented that the joint venture model represents insurmountable challenges and risks."

The government didn't give any details about the bid.

Before the factories start production, Indian Railways proposes to import 50 electric and 50 diesel locomotives over the next three years, Chidambaram said.

 

http://www.bloomberg.com/apps/news?pid=20601091&sid=akM4nzL_fPqM&refer=india

Global economic data to watch for the day (Feb 24)

Global economic data to watch for the day (Feb 24)

The Nifty & The Sensex Are Resting Upon Bank stocks-the collapse is imminent

Martin Weiss: The Chaos Theory At Work

It's the US and European Banks for now, but ultimately the global financial system will collapse. Then investors would question DV Rao's stupidity in lowering interest rates and encouraging unbridled lending to Real Estate, Durable and Automobile segments. But by then the over-owned SBI, PNB, BOB, BOI, HDFC, HDFC Bank, Kotak and a host of small NBFC type banks would have collapsed.

 

The nation's largest banks are so close to collapse and the world economy is coming unglued so rapidly, a major Wall Street meltdown is now imminent.

Specifically, it's now increasingly likely that virtually all of our forecasts of recent months could come to pass in a very short period of time, including ...

 

• Stock market crash: A swift plunge in stocks to about 5000 on the Dow, 500 on the S&P 500 and 900 on the Nasdaq ... or lower.

 

• Corporate bankruptcies: A chain reaction of Chapter 11 filings or federal takeovers, including not only General Motors and Chrysler, but also Ann Taylor, Best Buy, Jet Blue, Macy's, Saks Fifth Avenue, Sears, Toys "R" Us, U.S. Airways and even giants like Ford or General Electric.
  
  
• Megabank failures: Bankruptcies or nationalization not only of Citigroup and Bank of America, but also JPMorgan Chase and HSBC.
  
• Nationwide epidemic of small and medium-sized bank failures: Outright FDIC takeovers, with little prospect of nationalization.

 

• Insurance failures: State takeovers of companies like Ambac Assurance, Bankers Life and Casualty, Conseco, FGIC, Medical Liability Mutual, Mortgage Guaranty Insurance, Nuclear Electric Insurance, PMI Mortgage, Standard Life of Indiana and many others. (Our free guide also contains a more extensive list of insurers.)
  
  
• Cities and states: An epidemic of defaults by thousands of cities, states and other issuers of tax-exempt municipal bonds.
  
  
• Stock market shutdowns: Trading halts on major, big-cap stocks ... plus on-again, off-again exchange shutdowns, making it increasingly difficult for investors to liquidate their holdings at any price.
  
  
• Credit market deep freeze: A virtual shutdown in all debt markets except U.S. Treasuries. An avalanche of selling — and virtually no buyers — for corporate bonds, commercial paper, asset-backed securities, municipal bonds and all forms of bank loans.
  
  
• Government bond collapse: A steep decline in the price of medium-and long-term government securities, as the U.S. Treasury bids aggressively for scarce funds to finance a ballooning budget deficit.
• 
  

Shocking? Perhaps. Avoidable? No.

 

Nor am I alone in anticipating this rapid unraveling of the economy and financial markets. This past Friday, at a Columbia University dinner reported by Reuters ...

 

• George Soros said the financial system has effectively disintegrated, with the turbulence more severe than during the Great Depression and with the decline comparable to the fall of the Soviet Union, while ...
  
  
• Paul Volcker said he could not remember any time, even in the Great Depression, when things went down so fast and quite so uniformly around the world.
• 
  

Both recognize that we're in a new era of chaos. What's the landmark event that separates us from the past era of relative stability?

 

The collapse of Lehman was the final straw that punctured the already imploding bubble. And it was the first major domino that set off the chain reaction of events now careening out of control: The collapse of consumer credit markets ... surging unemployment ... and now, a new set of even larger financial failures looming.

 

The Raging Debate Right Now Is How To Prevent A Banking Collapse: To Nationalize Or Not To  Nationalize. But It's A Moot Point.

 

The fact is that the banking collapse has already occurred! Soon in many parts of Asia investors would be asking the same questions-why are SBI, BOB, BOI, PNB, Kotak, HDFC and HDFC Bank still standing, when the World around them has collapsed.

 

Investors will be fed the drivel that all these banks are adequately capitalised. But what the new RBI Governor is doing by artificially lowering interest rates is to feed the unproductive sectors of the economy..durables, housing and automobiles. Loans given out at the lowest possible rates in hard times suggest only one thing-the Indian Banks too would collapse, maybe over the next 6 to 12 months.

Tatas may drop another Bengal plan - Jai ho (Mamta) :)

Less than five months after Tata Motors [Get Quote] relocated its Nano project from West Bengal to Gujarat over land issues, another Tata group company, Tata Metaliks [Get Quote], is reviewing its expansion project in the state on similar grounds.

The West Bengal Industrial Development Corporation (WBIDC), which has been acquiring land in Kharagpur for Tata Metaliks' diversification project, has already initiated dialogue with the company. But land prices remain a contentious issue.

Subrata Gupta, managing director, WBIDC, said that land prices in the last three years have doubled. Prices, which were around Rs 3.5-4 lakh an acre three years ago when WBIDC started acquiring land, have now doubled to Rs 8 lakh.

Gupta said the company has been asked to pay a higher price. "Tata Metaliks has sought 15 days to respond," he said, adding that WBIDC officials had recently met a Tata Metaliks team after the company expressed its intent of withdrawing the project from the state.

Harsh K Jha, managing director, Tata Metaliks, confirmed that the company has sought time, but did not elaborate on the details. However, the company's board has decided not to wait for the land indefinitely. The company has already waited for four long years to get the required land, Jha said.

West Bengal Chief Minister Buddhadeb Bhattacharjee had promised Tata Metaliks on February 26, 2005, that the state would allocate land on a "priority basis". The company had applied for land on March 15, 2005.

Tata Metaliks, a pig iron producer, had initially sought 500 acres for its diversification into billets, but the land requirement was later scaled down to around 300 acres as contiguous land was not available.

Gupta said more than 150 acres has been acquired by WBIDC and the company has made an initial payment of Rs 9 crore for the land.

He also added that WBIDC would go ahead with land acquisition irrespective of the Tata Metaliks' decision. "Even if they do not set up the project, we will develop an industrial park," said Gupta.

WBIDC has decided not to acquire land for individual companies. Instead, it will set up industrial parks where companies will become anchor investors in a bid to maximise employment.

Tata Metaliks has also held discussions with the Karnataka government for an iron ore mining lease and for setting up of a plant. A high-level clearance committee of the state has already given approval for a steel plant in Haveri district.

At present, Tata Metaliks has pig iron facilities at Kharagpur in West Bengal and Redi in Maharashtra. The company has an annual capacity of 650,000 tonnes. Even though the diversification plan at Kharagpur is under the cloud, the company has lined up expansion of the existing plant. A sinter plant is being set up which will be commissioned in 2010.

 

http://www.rediff.com/money/2009/feb/24tatas-may-drop-another-bengal-plan.htm

The Next 18 Months: Recession, False Recovery, Depression

The Next 18 Months: Recession, False Recovery, Depression

Sam Vaknin, Ph.D. - 2/22/2009

The Obama stimulus package, worth some 800 billion USD, the 1.9 trillion USD in TARP funds and the endless Fed injections and auctions are bound to revive the moribund American economy by the third and fourth quarter of 2009. The Dow-Jones is likely to touch 10900, consumption will recover, as will housing starts and, in some markets, housing prices.

But this "recovery" will prove to be a false dawn. It will last 2 quarters at most and will be followed by a recession so deep and dangerous that it would truly qualify as a Depression. The current recession is merely a prelude to the depression of 2010-5.

Here are the reasons:

(i) The stimulus should have been more sizable, taking into account the dimensions of the crisis.

The fate of modern economies is determined by four types of demand: the demand for consumer goods; the demand for investment goods; the demand for money; and the demand for assets, which represent the expected utility of money (deferred money).

Periods of economic boom are characterized by a heightened demand for goods, both consumer and investment; a rising demand for assets; and low demand for actual money (low savings, low capitalization, high leverage).

Investment booms foster excesses (for instance: excess capacity) that, invariably lead to investment busts. But, economy-wide recessions are not triggered exclusively and merely by investment busts. They are the outcomes of a shift in sentiment: a rising demand for money at the expense of the demand for goods and assets.

In other words, a recession is brought about when people start to rid themselves of assets (and, in the process, deleverage); when they consume and lend less and save more; and when they invest less and hire fewer workers. A newfound predilection for cash and cash-equivalents is a surefire sign of impending and imminent economic collapse.

This etiology indicates the cure: reflation. Printing money and increasing the money supply are bound to have inflationary effects. Inflation ought to reduce the public's appetite for a depreciating currency and push individuals, firms, and banks to invest in goods and assets and reboot the economy. Government funds can also be used directly to consume and invest, although the impact of such interventions is far from certain.

(ii) The US government should have nationalized the big banks, let other financial institutions that are not too big to fail do so, and force mergers and acquisitions on the rest. Half-hearted measures intended to provide balance-sheet relief are unlikely to restore trust in financial intermediaries. In the absence of such trust, banks will not resume their traditional roles of capital allocation and interbank lending. As it is, we are likely to see a run on some of the banks, including at least one major (probably Wells Fargo).

(iii) Europe's real economy as well as its financial sector are a mess. France, in sliding officially into a recession, has joined Spain, Ireland, and, now, the United Kingdom and Germany. Battered by a strong euro, expensive energy, and mighty competition from China, the US, and India, European exports have stagnated. As opposed to the USA (where exports constitute 18% of GDP), Europe is dependent on foreign carbon fuels and foreign markets for its goods and services. Exports constitute more than 40% of Eurozone GDP.

Moreover, Europe's commercial banks are in horrible shape - far worse than America's. This year alone, European banks must pay 1.41 trillion US dollars in principal and interest, mainly to bondholders. They don't have the money and they cannot borrow it from other banks because interbank lending has all but dried up. Many of them are already technically insolvent. They are also over-exposed to emerging markets in Eastern Europe, Latin America, Africa, and Asia.

Car repossessions are up 25% in Romania, as the members of a newly-minted class of consumers are unable to meet their obligations. Austrian, Greek, Swedish, and German banks are exposed to default risks throughout Central and Eastern Europe. Consumers and businesses in Serbia, Ukraine, Hungary, and other teetering economies owe Austrian financial institutions $290 billion - almost the entire GDP of this country!

As local currencies depreciate, debts, denominated in foreign exchange, grow more expensive to service. As the real economy contracts, in the first phase of what appears to be a prolonged recession, bad loans mushroom and reserves are exhausted. This requires cash-strapped governments to recapitalize major banks. Faced with current account and budget deficits, some of these sovereigns are scrambling for outside infusions from the likes of the IMF.

Europe's recession will be profound and protracted. Asia is likely to follow suit: Singapore, Japan, South Korea, and Taiwan are already technically in recession and China's growth rate is abating. A contraction of GDP in both India and China is no longer inconceivable. It seems that yet again, the USA will be faced with the daunting task of dragging the rest of the world back to growth and profitability.

(iv) To finance enormous bailout packages for the financial sector (and potentially the auto and mining industries) as well as fiscal stimulus plans, governments will have to issue trillions of US dollars in new bonds. Consequently, the prices of bonds are bound to come under pressure from the supply side.

But the demand side is likely to drive the next global financial crisis: the crash of the bond markets.

As the Fed takes US dollar interest rates below 1% (and with similar moves by the ECB, the Bank of England, and other central banks), buyers are likely to lose interest in government bonds and move to other high-quality, safe haven assets. Risk-aversion, mitigated by the evident thawing of the credit markets will cause investors to switch their portfolios from cash and cash-equivalents to more hazardous assets.

Moreover, as countries that hold trillions in government bonds (mainly US treasuries) begin to feel the pinch of the global crisis, they will be forced to liquidate their bondholdings in order to finance their needs.

In other words, bond prices are poised to crash precipitously. In the last 50 years, bond prices have collapsed by more than 35% at least on three occasions. This time around, though, such a turn of events will be nothing short of cataclysmic: more than ever, governments are relying on functional primary and secondary bond markets for their financing needs. There is no other way to raise the massive amounts of capital needed to salvage the global economy.

http://www.globalpolitician.com/25449-depression-recession-stimulus-europe-recovery

Bangalore airport to charge a development fee from all passengers

If you are traveling from Bangalore, please note that the Bengaluru International Airport is now charging a User Development Fee of Rs 260. This fee will be charged effective January 16, 2009 and be collected directly by the airport.

Who will be affected?
All passengers travelling out of Bangalore from the Bengaluru International Airport will have to pay Rs 260. However, infants under 2 years are exempted.

Where to pay the UDF?
You can pay the fee at the specially built counters just outside the terminal. You will then have to show the receipt before entering the terminal.

How can I pay?
You can pay by cash, credit cards or debit (only Visa, MasterCard and American Express) at the UDF counters outside the terminal. If you are paying by cash, we would advise you to have the exact change ready.

Will it take time?
While the airport has made provisions to provide enough counters, it may take up to 10 minutes during peak hours - from 6am to 10am and 5:30pm to 8:30pm. While at other times, it may take no more than 3 to 4 minutes.

But why is this extra amount being charged?
The UDF of Rs 260 has been approved by the Ministry of Civil Aviation, Government of India. This amount will be used for the development and maintenance of this state of the art airport and to provide other services and amenities.

For any other information, you can contact the Bengaluru International Airport at 080 - 66782251 or 666782255 or visit their website: www.bengaluruairport.com.

Movies on Stock Market

Following are some I found, along with links to description pages on
the Internet Movie Database. Obviously, some have more to do with the
stock market than others do, but all of them have at least one central
figure who is involved in the market.

Wall Street (1987)

The Family Man
(disillusionment of an investment broker)
http://www.imdb.com/title/tt0218967/

American Psycho
(homicidal stock broker)
http://www.imdb.com/title/tt0144084/

Other People's Money
(ins and outs of hostile takeovers and such; the play was better)
http://www.imdb.com/title/tt0102609/

The Bonfire of the Vanities
(main character is financial wizard)
http://www.imdb.com/title/tt0099165/

The Cheat
(charity money used to buy Wall Street investments)
http://www.imdb.com/title/tt0005078/

The Day the Bubble Burst
(historical TV drama about that day)
http://www.imdb.com/title/tt0082238/

Stocks and Blondes
http://www.imdb.com/title/tt0019423/

Changing Lanes
(one of my favorite movies; story involves questions about business
ethics)
http://www.imdb.com/title/tt0264472/

The Wheeler Dealers
http://www.imdb.com/title/tt0057681/

Money-Go-Round
http://www.imdb.com/title/tt0295449/

The Crash
(yes, that crash)
http://www.imdb.com/title/tt0022784/

The Boss' Wife
(stock broker has affair with title character)
http://www.imdb.com/title/tt0090767/

Net Worth
(trying to get rich quick)
http://www.imdb.com/title/tt0163764/

Buy & Cell
(that's jail cell for stock fraud)
http://www.imdb.com/title/tt0096997/

Wanda Whips Wall Street
(just what it sounds like, rated X)
http://www.imdb.com/title/tt0083314/

Don't Tell the Wife
(stock fraud)
http://www.imdb.com/title/tt0028799/

Wolves of Wall Street
http://www.imdb.com/title/tt0339918/

Boiler Room (2000)

http://www.imdb.com/title/tt0181984/

 

http://rapidshare.com/files/133755250/.B.R..part1.rar

http://rapidshare.com/files/133771512/.B.R..part2.rar

http://rapidshare.com/files/133790672/.B.R..part3.rar

http://rapidshare.com/files/133911137/.B.R..part4.rar

 

 

Rogue Trader (1999) - Based on Barrings Bank Fiasco by over trading by one of its Employee

http://www.imdb.com/title/tt0131566/

This 13-year old documentary is very relevant to the current crisis..

The Money Masters - How International Bankers Gained Control of America

http://video.google.com/videoplay?docid=-515319560256183936

http://www.themoneymasters.com/reviews.htm

Zeitgeist, The Movie - Remastered / Final Edition 

http://www.zeitgeistmovie.com/statement.htm

http://video.google.com/videoplay?docid=-594683847743189197&ei=QIyiSf36BI-2wgPT7LjICg&q=zeitgeist+

Zeitgeist: Addendum 

http://video.google.com/videoplay?docid=7065205277695921912&ei=1YuiSb73Bo-4wgPfg4G2Bw&q=zeitgeist+addendum

BSNL slashes mobile STD rate to 50 paise/min

BSNL slashes mobile STD rate to 50 paise/min



Chennai: Ahead of the Lok Sabha elections, BSNL is ringing in good news for lakhs of phone users. Its India Golden 50 scheme will cut mobile STD or long-distance tariffs to 50 paise a minute. The scheme will be launched for pre-paid mobile services on March 1.
   Charges for the scheme will be Rs 375 plus applicable taxes with free talk value of Rs 50. In addition, customers can make local and STD calls to select BSNL numbers at 20 paise and 30 paise per minute respectively. Each SMS will be charged 50 paise.
   BSNL has also tweaked its landline plans. The hitherto 60-second pulse for a call has been doubled to 120 seconds. This effectively allows the caller to speak for twice the time at the same tariff.
   Union telecom minister A Raja said DoT would introduce mobile number portability (MNP) in major cities by August. This service will allow subscribers to migrate from one operator to another without changing their numbers. TNN

Sent from my BlackBerry® smartphone

Equity funds sitting on Rs 20,000-cr cash chest

Equity mutual funds are choosing to hold sizeable cash positions in view of current market uncertainties. 
Data from Indsec Securities, based on January-end portfolios, show that average cash positions across equity funds were as high as 20 per cent, amounting to over Rs 20,000 crore across fund houses. 
Mutual fund managers say that unprecedented volatility has prompted them to wait on the sidelines for buying opportunities. The proportion of cash to total equity assets has gone up from 10.1 to 20.5 per cent between January 2008 and now. Though the actual cash holdings have only increased from Rs 18,000 crore to Rs 20,000 crore, the contraction in equity fund assets (due to NAV declines and some outflows) has resulted in a larger proportion of cash. Cash includes cash and cash equivalents such as money market instruments and short-term debt instruments.
Among the larger asset management companies (AMCs) Reliance Mutual Fund and UTI Mutual Fund hold cash positions amounting to about 30 per cent of the equity assets while those such as SBI and HSBC Mutual hold about 20-22 per cent. 
These cash holdings are not evenly spread across schemes. 
Thematic funds, which typically focus on one sector (say, infrastructure) or theme (mid/small-cap stocks), account for a big portion of the cash holdings, while diversified equity funds have lower cash on their portfolios. 
Reliance Diversified Power, Reliance Natural Resources, UTI Infrastructure and DSP BlackRock TIGER fund are some thematic funds which are high on cash and cash equivalents. 
In some cases, cash positions (for funds such as Reliance or Birla Sun Life) are held against their exposure to derivatives in select schemes.

Are equity fund managers holding high levels of cash anticipating pullouts from the funds? Fund houses deny that that is the case. 
Equity funds saw relatively small net outflows (redemptions) of Rs 1,378 crore in the choppy October-December 2008 quarter. In January, there was Rs 338 crore of new outflows. 
Fund managers who are high on cash appear to be taking the view that the worst isn't over yet for the stock markets. Mutual funds have made net sales in stocks amounting to Rs 2,521 crore so far in 2009. 
Mr Sanjay Dongre, Senior Equity Fund Manager, UTI Mutual Fund, says that redemption pressures faced by the equity funds were at "negligible" levels, as the investor base was mainly retail. 
"We are holding higher cash positions on our funds given the uncertainty prevailing in the marketplace, where the risk appetite of investors is extremely low. Our diversified funds hold a 15-18 per cent allocation to cash and the thematic funds hold larger cash positions."

Asked if the fund house is looking for a specific market level (say, a Sensex of 8,000 or 8,500) to deploy this cash, Mr Dongre replied that it is uncertainty rather than the prevailing market valuation, that is prompting the cautious stance. "If we see risk capital returning to the markets and the uncertainty receding, we will go ahead and deploy that cash, even if market levels are higher than they are currently," he said. 
At the other end of the spectrum, fund houses such as HDFC Mutual Fund and Franklin Templeton Mutual hold only about 7 per cent of their equity fund portfolios in cash. 
These AMCs have consistently followed a practice of remaining more or less fully invested, irrespective of market swings.

Source: http://www.thehindubusinessline.com/2009/02/23/stories/2009022351410100.htm <http://www.thehindubusinessline.com/2009/02/23/stories/2009022351410100.htm>

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Why China Works?

Why China Works

A look at bright spots in the recession begins with Beijing, where state control is looking smart.
Rana ForooharNEWSWEEK
From the magazine issue dated Jan 19, 2009

China is the only major economy that is likely to show significant growth this year, because it is the only one that routinely breaks every rule in the economic textbook. There is no truly free market in China, where the state doctors statistics, manipulates the stock markets, fixes prices in key industries, owns many strategic industries outright, and staffs key bank posts with Communist Party members and tells them to whom they should lend, and in what they should invest. In fact, the main reason China is not slowing as fast as the other big five economies is its capacity for what economists ridicule, in normal times, as state meddling: it limited foreign investment in the banking sector and didn't embrace the exotic financial innovations that are the melting core of the global credit crisis.
Why does China's brand of command capitalism work? The question has long intrigued economists, who tend to cast the state as hopelessly stupid, the market as naturally brilliant. Now that the United States and Europe are moving toward state control—by nationalizing the banking and car industries, and imposing heavy new regulation on the financial industry—the question has a new urgency. China, the poorest and most chaotic big economy, looks like the one best positioned to navigate what may be the worst global downturn in seven decades.
In a time of crisis, China's bureaucrats can pick from traditional market tools, like their Western counterparts, and from the arsenal of command capitalism. Early last year, as the housing market was overheating, they simply ordered bankers to cut back on housing loans: then as home sales began to fall, they offered market incentives, like lower taxes on home purchases. In recent weeks they launched economic rescue efforts similar to those in the west, including a huge ($600 billion) plan to ramp up government spending and big interest-rate cuts. But they've also issued orders that would be seen as improper "intervention" in the West—for example, calling last week on state industries, including steel and construction, to "actively increase" their roles in the economy by buying up new assets at home and abroad.
Once seen as the bad habit of an immature economy, China's state meddling is now seen as a bulwark of stability. "Government control of the most capital intensive sectors leaves me optimistic about China's prospects," says CLSA economist Andy Rothman. "The government can say to companies in these sectors, 'Continue to spend, don't defer your investment plans'." Despite the falls in its biggest export markets and its own stock markets, China's economy looks likely to grow more than 7 percent in 2009—down from the double-digit pace of recent years, but stronger than most. Corporate loan rates are actually up, as state banks loosen credit. In a nation where investment is "the backbone of sustainable growth," accounting for 40 percent of GDP, the state is once again ramping up investment to fight serious threats to growth, says Morgan Stanley Asia chief Stephen Roach. "What we're seeing is that the Chinese command-and-control system can actually work more effectively than other market based systems in times of economic stress," he says.
When the original capitalist roader, Deng Xiaoping, said "It doesn't matter if a cat is white or black, as long as it catches the mouse," he put economic growth above ideology purity. Now Chinese leaders quote Deng to defend the basic deal he offered the Chinese people: autocratic capitalism would provide economic growth, while the Communist Party would retain absolute political power. Many of these leaders now argue that a democratic China couldn't have survived—let alone flourished—in a global recession. "China isn't ready for a democratic free-market system," says Fang Xinghai, the Western-trained director of the Shanghai Financial Services Office. "Think about what happened in the U.S. elections in 2000—if that had happened in China, there would be a war. The genius of Deng is that when he put China on the path to a market economy 30 years ago, he knew the country needed a stable political system [to withstand the changes of reform]. Whatever our system is, it is suitable for China."
China works because it is governed by a radical pragmatism that has focused on a slow but steady shift toward freer markets. Deng called it "crossing the river by feeling for the stones." The state still exerts a strong and stabilizing hand, but it has unleashed a private sector that now controls at least half the economy, and as much as 70 percent if you include state-owned companies that are in fact allowed to operate as private firms. That's up from around 17 percent in the early 1990s. Some 60 percent of GDP growth, and two thirds of new job creation now come from the private sector, according to CLSA.
In 1995, China began a revolutionary dismantling of state-run industry, laying off 46 million state workers—the equivalent of the entire workforce of France and Italy—over the next six years alone. In the years following, the streamlining has continued, sharply raising profitability at state-run firms (it was up 38 percent between 2004 and 2005, for example), and the private sector was allowed to play an increasingly important role in the economy. Rothman calls it "radical change, but over an extended time period." During this period numerous books on Russia's transition to capitalism were translated into Chinese. Above all, the Chinese wanted to avoid the chaos that followed Russia's "big-bang reforms" of the early '90s, which created a corrupt, Kremlin-sponsored economic oligarchy that still haunts Russia today.
China's crackdowns on political dissent have obscured the daring risks it takes on economic reform, even in crises. China opened to Western investment at an earlier stage of development than either Japan or South Korea—in the early 1980s, when its average yearly income was only 760rmb ($500), because Deng recognized that global trade was the way out of national poverty. He also freed peasants to seek jobs in cities, a risky move in a nation with a long history of mobile peasant rebellions. Even after the Tiananmen massacre of 1989, Deng continued to push economic reform. During the Asian financial crisis of the late 1990s, China joined the World Trade Organization, committing itself to a wider opening of its domestic markets. Around the same time, the government allowed laid-off workers to start businesses and buy up state-owned housing for a song, founding an ownership society almost overnight, and setting the stage for a middle-class society, in what Rothman calls "the biggest one-time transfer of wealth in the history of the world."
Now, as a worse crisis gains momentum, Beijing continues to push market reforms in key sectors, even as it reasserts control in others. Banks are one main target of reform. "Capital markets are still dominated by bank lending. We have too few products and we need to get more institutional investors into the market," says Fang Xinghai. To that end, China is boldly moving beyond stocks into new types of complex securities, including stock index funds, corporate bonds and other debt products, and even options and futures trading—albeit simple oil futures, rather than the complex credit derivatives that tanked Western markets. The fact that Chinese leaders understand even in the midst of the credit crisis that more sophisticated forms of securitization can play a stabilizing role is a sign of strategic thinking, and great skill at learning from others' mistakes. Asked what he admires most in Western counterparts, Jiang Jianqing, chairman of China's largest state bank, ICBC, says, "Innovation. Americans have an endless passion for it. Perhaps in the past, it hasn't been so well regulated, but you can't stop it. It's one of the most important ways to push enterprise forward."
Even more farsighted is the new, landmark land-reform program, which would make it possible for Chinese peasants to rent or lease their land to outsiders (including corporations). Simply figuring out who owns which properties can be a Byzantine task in China, so land reform could take decades—but the idea is already generating excitement. In November, real-estate consulting firm Jones Lang LaSalle estimated that land reform could unlock rural property worth as much as $2.5 trillion. "Land reform will be Hu Jintao's lasting legacy," says JLL national research director Michael Klibaner. Turning peasants into land-owning consumers could go a long way toward creating a consumer society, reducing China's dependence on exports, and rebalancing the world economy.
Once Chinese leaders signal a new direction, they rarely waver, says Rothman. Witness the political battle over American charges that China is deliberately holding down the value of the yuan to boost its exports, a charge that ignores the gradual 21.5 percent rise in the yuan that had already taken place between the summer of 2005 and 2008. While the yuan did fall a bit in recent months, most economists believe Beijing will continue to allow a modest appreciation, weighing its need for export competitiveness against the world's need for more balanced trade flows.
This balance between free and managed markets can also be seen in China's approach to price fixing and state control in key sectors like financial services, telecoms, utilities and energy. Some of these industries are partially privatized—in telecoms, equipment markets are open to foreigners, because they bring capital and expertise that eventually trickles down to local firms, like the now internationally competitive Huawei. But the more lucrative services market is still run by authorities, who set prices on mobile-phone calls. "China does control prices, it's true," says Fang. "But it moves one step behind the market. The market is always the baseline."
Recently, for example, China has been cutting fuel subsidies to bring prices closer to international norms. It's part of a 15-year process, that, according to CLSA's Rothman, has taken the percentage of total consumer prices fixed by the state from 95 percent to as low as 5 percent. The slow easing was designed to avoid the 1,000 percent burst of inflation that hit Russia from 1991 to 1992 after Moscow deregulated prices. "The Chinese don't want shock therapy, which has proven to be all shock, and no therapy," says Cheng Li, a senior fellow at the Brookings Institute.
The leadership's faith in its own ability to mold markets may derive from the fact that most are engineers, trained to build from a plan. Eight out of the nine top party officials come from engineering backgrounds, and the practicality of their profession may also help explain why they didn't buy into risky and Western financial innovation. At a recent Chinese business conference in Barcelona, Xu Kuangdi, vice chairman of the advisory body to China's Parliament, and President of the Chinese Academy of Engineering, mocked the "virtual" products sold over the last decade by Western bankers: "They had Ph.D.s in physics inventing tools that the banks themselves couldn't understand or regulate. Investors listened to their stories and were told how wonderful all this would be, how much better it was than producing real goods. Everyone was working in a dream."
A command-and-control system run by relatively skilled technocrats allows China to get things done, quickly. "I'm always struck by the ability of the Chinese state to move in a coherent manner and to marshal its people and the resources of the country to a common target," noted David Murphy, head of CLSA's China Reality research division, in a recent report on the country's efforts to bolster growth. Contrast this to Russia, where thuggish autocracy has created an "anything goes" environment in which neither investors nor most officials have any idea what might happen from one moment to the next.
The ruling engineers preside over a system that is highly process-oriented and obsessed with performance metrics. One economist who works closely with top government officials notes that many of them serve the same brand of Chateau Lafite Bordeaux at their dinner parties because of its exceptional rating by the Wine Spectator's Robert Parker. Ambassador Wu Jianmin of the Chinese foreign ministry recalls a recent meeting with a deputy mayor from the city of Wuxi who could compare in detail his own local economy with that of the United States in the 1970s. The official was concerned about why his service sector hadn't grown larger, given the respective per capita income growth (the town's party secretary has since been dispatched to America to hunt for service-sector talent).
Leaders who don't meet internal performance standards are, more often than not, held accountable, and do get sacked, which is still unusual in many developing economies. For instance, the scandal in which at least six Chinese kids died and 300,000 fell ill from toxic milk mixed with melamine to give a falsely high protein level led to the swift sacking in September of six city officials—including the mayor and party secretary—in the hometown of milk-powder maker Sanlu. China's top food safety inspector also stepped down and the company's chairwoman has gone to trial. Such moves seldom fully satisfy public anger but they do rattle officials.
Clear performance targets are part of an efficiency ethos that the Chinese also tend to admire in Americans. Four out of five high-ranking officials now train for some period of time at major universities in the United States (the Kennedy School at Harvard has been nicknamed "the fourth Communist Party school"). What the Chinese people still want at this stage is prosperity, and stability, which they are pursuing with a pragmatic, capitalist zeal that arguably surpasses even that of Americans. Huang Ming, who teaches at both Cornell in New York and the Cheung Kong Graduate School of Business in Beijing, jokes that while he can command respect in the United States simply by telling people he's a tenured professor at an Ivy League university, Chinese people say, "OK, that's good, but how much money do you make?"
Of course, the increase in Chinese prosperity has also created more opportunities for corruption, yet steady progress is visible even when it comes to graft. In just under a decade, China has fallen from 52nd most corrupt country to the 72nd, according to Transparency International's ranking of the world's most corrupt regimes. While Chinese and Western business people don't like to be quoted by name on the subject, they seem to agree that corruption in China tends to be of the soft, "wheel-greasing" variety, rather than the violent and disruptive type. "You don't have to worry about someone coming to your door with a bulge under their arm," laughs one British businessman working in Shanghai. One chairman of a large European firm, who has worked in a number of developing markets, makes this comparison: "In Russia, if there's $100 in the bridge-building pot, the official takes $90. In China, they take $30, and at least you know the bridge will eventually get built."
Many point to the current insider-trading case involving the detention of China's richest man, Huang Guangyu (the founder of electronics retailer Gome), as proof that the government is also getting more serious about prosecuting corruption. Independent economist Andy Xie (formerly of Morgan Stanley) says that the more important point is that Gome, the company, will most likely survive regardless of what happens to Huang—a sign that Chinese markets are maturing. Xie also notes that recent legal changes in stock-ownership law have made markets more liquid, putting them farther out of the control of state authorities. That's one reason authorities have tried since August to revive the stock market by scrapping the stamp tax on share purchases but in vain. The market is getting too free for the state to control.
That said, there's no doubt the state's hand in the economy will grow in this downturn. Much of the new stimulus package will flow through state-controlled sectors like transport and power a
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Sebi mulls norms to let investors decide MF fee

New regulations on entry load likely to be announced within a month; details of the plan yet to be finalized

The Securities and Exchange Board of India, or Sebi, is drafting new norms that would offer mutual fund investors a band or range of entry loads to pick from while purchasing units of a mutual fund, said a senior official at the market regulator. An entry load is the commission that an investor has to pay a distributor while purchasing units. Currently, investors pay an average 2.25% of the sum invested as entry load if they buy the units from a distributor, who is a third party, but they pay nothing if they buy directly from the fund house. The new norms are likely to be announced in a month, the official said requesting anonymity as details of the plan have not yet been finalized. Empowering Investors: Sebi chairman C.B. Bhave. The new Sebi norms are expected to make distributors more competent to justify their role. Abhijit Bhatlekar / MintAccording to the Association of Mutual Funds in India a 13-year old industry lobby, there were about 47 million mutual fund account holders in India at the end of 2008. There were some 35 mutual fund houses with net assets under management of about Rs4.6 trillion, at the end of January. The bulk of mutual fund unit sales in the country, however, are conducted through a large, unorganized network of distributors, which also include a few large players that have their own fund offerings. The largest third party distributors of mutual fund products in India are banks such as ICICI Bank Ltd and HDFC Bank Ltd. Several brokerages and non-banking finance companies also have large mutual fund products distribution businesses. "This (move) will hugely empower mutual fund investors," said the Sebi official, adding that it would force "distributors to stay competent to justify their role".

The move could also help increase the current investor base, this official said. "Penetration of mutual funds can be much more (but) .. without distributors, it would have been even less," said Uttam Aggarwal, who heads the mutual fund distribution business of Bajaj Capital Ltd, which is present in 90 towns and manages about one million investors. "Look at Quantum (Quantum Asset Management Co. Pvt. Ltd), its asset under management is in double digit crore," said Aggarwal. Quantum does not have a distribution model and does not charge entry load from investors. At the same time, financial services firms with established distribution capabilities have now expanded to included funds management business to leverage their strength."We are in this business to leverage our strong distribution capabilities," says Nitin Rakesh, chief executive of asset management with domestic retail brokerage Motilal Oswal Financial Services Ltd, one of the latest players in the funds business. In fact, fund houses recognize the grip that distributors have over access in both directions. The penetration of mutual funds in India, have been "severely limited" by distributors, Ashu Sayash, managing director and country head (India) of Fidelity Advisors International, had said in June last year. He was speaking at the launch of FundsNetwork, an online fund distribution portal that Fidelity International, the world's largest mutual fund manager, had launched. "The existing mutual fund business model is also not as profitable as insurance," said Aggarwal. "Insurance allows you to reach the smallest towns but mutual funds have regulatory issues (such as daily net asset value, or NAV, disclosures and cap on marketing expenses)." Unlike the third party distributors of, say, insurance products, who can only sell policies of one firm, mutual fund distributors are free to sell schemes from any fund house. Not surprisingly, fund houses often fall over each other to woo distributors so they will push their products. Sebi currently allows mutual funds to spend up to 6% of a scheme as marketing expense, and fund houses typically spend part of this allocation on distributors.

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The Next 18 Months: Recession, False Recovery, Depression

The Next 18 Months: Recession, False Recovery, Depression
Sam Vaknin, Ph.D. - 2/22/2009The Obama stimulus package, worth some 800 billion USD, the 1.9 trillion USD in TARP funds and the endless Fed injections and auctions are bound to revive the moribund American economy by the third and fourth quarter of 2009. The Dow-Jones is likely to touch 10900, consumption will recover, as will housing starts and, in some markets, housing prices.

But this "recovery" will prove to be a false dawn. It will last 2 quarters at most and will be followed by a recession so deep and dangerous that it would truly qualify as a Depression. The current recession is merely a prelude to the depression of 2010-5.

Here are the reasons:

(i) The stimulus should have been more sizable, taking into account the dimensions of the crisis.

The fate of modern economies is determined by four types of demand: the demand for consumer goods; the demand for investment goods; the demand for money; and the demand for assets, which represent the expected utility of money (deferred money).

Periods of economic boom are characterized by a heightened demand for goods, both consumer and investment; a rising demand for assets; and low demand for actual money (low savings, low capitalization, high leverage).

Investment booms foster excesses (for instance: excess capacity) that, invariably lead to investment busts. But, economy-wide recessions are not triggered exclusively and merely by investment busts. They are the outcomes of a shift in sentiment: a rising demand for money at the expense of the demand for goods and assets.

In other words, a recession is brought about when people start to rid themselves of assets (and, in the process, deleverage); when they consume and lend less and save more; and when they invest less and hire fewer workers. A newfound predilection for cash and cash-equivalents is a surefire sign of impending and imminent economic collapse.

This etiology indicates the cure: reflation. Printing money and increasing the money supply are bound to have inflationary effects. Inflation ought to reduce the public's appetite for a depreciating currency and push individuals, firms, and banks to invest in goods and assets and reboot the economy. Government funds can also be used directly to consume and invest, although the impact of such interventions is far from certain.

(ii) The US government should have nationalized the big banks, let other financial institutions that are not too big to fail do so, and force mergers and acquisitions on the rest. Half-hearted measures intended to provide balance-sheet relief are unlikely to restore trust in financial intermediaries. In the absence of such trust, banks will not resume their traditional roles of capital allocation and interbank lending. As it is, we are likely to see a run on some of the banks, including at least one major (probably Wells Fargo).

(iii) Europe's real economy as well as its financial sector are a mess. France, in sliding officially into a recession, has joined Spain, Ireland, and, now, the United Kingdom and Germany. Battered by a strong euro, expensive energy, and mighty competition from China, the US, and India, European exports have stagnated. As opposed to the USA (where exports constitute 18% of GDP), Europe is dependent on foreign carbon fuels and foreign markets for its goods and services. Exports constitute more than 40% of Eurozone GDP.

Moreover, Europe's commercial banks are in horrible shape - far worse than America's. This year alone, European banks must pay 1.41 trillion US dollars in principal and interest, mainly to bondholders. They don't have the money and they cannot borrow it from other banks because interbank lending has all but dried up. Many of them are already technically insolvent. They are also over-exposed to emerging markets in Eastern Europe, Latin America, Africa, and Asia.

Car repossessions are up 25% in Romania, as the members of a newly-minted class of consumers are unable to meet their obligations. Austrian, Greek, Swedish, and German banks are exposed to default risks throughout Central and Eastern Europe. Consumers and businesses in Serbia, Ukraine, Hungary, and other teetering economies owe Austrian financial institutions $290 billion - almost the entire GDP of this country!

As local currencies depreciate, debts, denominated in foreign exchange, grow more expensive to service. As the real economy contracts, in the first phase of what appears to be a prolonged recession, bad loans mushroom and reserves are exhausted. This requires cash-strapped governments to recapitalize major banks. Faced with current account and budget deficits, some of these sovereigns are scrambling for outside infusions from the likes of the IMF.

Europe's recession will be profound and protracted. Asia is likely to follow suit: Singapore, Japan, South Korea, and Taiwan are already technically in recession and China's growth rate is abating. A contraction of GDP in both India and China is no longer inconceivable. It seems that yet again, the USA will be faced with the daunting task of dragging the rest of the world back to growth and profitability.

(iv) To finance enormous bailout packages for the financial sector (and potentially the auto and mining industries) as well as fiscal stimulus plans, governments will have to issue trillions of US dollars in new bonds. Consequently, the prices of bonds are bound to come under pressure from the supply side.

But the demand side is likely to drive the next global financial crisis: the crash of the bond markets.

As the Fed takes US dollar interest rates below 1% (and with similar moves by the ECB, the Bank of England, and other central banks), buyers are likely to lose interest in government bonds and move to other high-quality, safe haven assets. Risk-aversion, mitigated by the evident thawing of the credit markets will cause investors to switch their portfolios from cash and cash-equivalents to more hazardous assets.

Moreover, as countries that hold trillions in government bonds (mainly US treasuries) begin to feel the pinch of the global crisis, they will be forced to liquidate their bondholdings in order to finance their needs.

In other words, bond prices are poised to crash precipitously. In the last 50 years, bond prices have collapsed by more than 35% at least on three occasions. This time around, though, such a turn of events will be nothing short of cataclysmic: more than ever, governments are relying on functional primary and secondary bond markets for their financing needs. There is no other way to raise the massive amounts of capital needed to salvage the global economy.

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News Updates

Dow +107Point in Future after US Government May Take Up To 40% Stake In Citigroup
US Government May Take Up To 40% Stake In Citigroup, Citigroup is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, people familiar with the situation say. While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%.
 
Bharat Heavy Electricals Ltd said it had received a 31.5 billion rupee ($635 million) order for supplying two 600 megawatt plants for a power project in central India.
 
Infosys Technologies has identified European SAP services firms BCC and Ciber Novasoft, among others, as potential acquisition targets. The move is part of the company's plan to increase revenues from SAP-based services and compete more effectively. While Infosys is evaluating the potential acquisition targets, a final transaction could be still far away, the Web site reported two people familiar with the discussions as saying, speaking on condition of anonymity. This is "especially, since there is no agreement yet on the valuation of BCC and the SAP services unit of Ciber.
BCC is headquartered in Poland and has a significant presence in the German market, while Ciber Novasoft is based in Germany. http://economictimes.indiatimes.com/Infosys-identifies-EU-SAP-firms-as-potential-targets/articleshow/4172128.cms <http://economictimes.indiatimes.com/Infosys-identifies-EU-SAP-firms-as-potential-targets/articleshow/4172128.cms>
http://in.reuters.com/article/businessNews/idINIndia-38156820090223 <http://in.reuters.com/article/businessNews/idINIndia-38156820090223>
 
Reliance Industries will soon acquire clean storages in the U.S. East Coast and Gulf Coast to sell huge volumes of fuel, a senior official said, putting in place its global infrastructure that will cement its swing-supplier role http://in.reuters.com/article/businessNews/idINIndia-38154220090223 <http://in.reuters.com/article/businessNews/idINIndia-38154220090223>
 
Reliance Power plans to double the capacity of its coal-based Butibori power project to 600 megawatts, the Business Standard reported on its Web site Monday, citing Chief Executive Officer Jayarama Chalasani, following a request by Maharashtra Chief Minster Ashok Chavan. Special purpose vehicle Vidarbha Industries Power was launched by Reliance Power and local industries in the MIDC region of Nagpur and its surrounding areas to construct the first group captive power project in the region. The fast-track project is expected to go on stream by 2011. http://www.business-standard.com/india/news/r-power-to-double-butibori-capacity/04/06/349818 <http://www.business-standard.com/india/news/r-power-to-double-butibori-capacity/04/06/349818>
 
Oil and Natural Gas Corp has discovered oil in the hydrocarbon-rich Krishna Godavari basin, which may turn out to be significant for the country's largest oil explorer, the Economic Times reported on its Web site Monday, citing a person close to the development. The person, who didn't wish to be named, said the discovery took place in block KG-DWN-98/2 and ONGC is now accessing the reserves, the Web site reported. An announcement on this is expected in a month or so, the person said, the Web site reported. ONGC offshore director Sudhir Vasudeva declined to comment on the discovery, citing confidentiality, http://economictimes.indiatimes.com/Economy/ONGC-strikes-oil-in-KG-basin/articleshow/4172523.cms <http://economictimes.indiatimes.com/Economy/ONGC-strikes-oil-in-KG-basin/articleshow/4172523.cms>
 
NTPC suspended work on a 600 megawatt hydroelectric project in the northern state of Uttarakhand due to a protest by an environmentalist. The construction of the Loharinag-Pala project began in July 2006 and the first turbine was scheduled to be commissioned in April 2011. NTPC had planned to invest INR32.83 billion in the project. An NTPC executive, who did not wish to be named, told Dow Jones Newswire
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Wall Street Awaits Bank Rescue Plan

Bears could have the upper hand again next week if Wall Street fails to get assurance that major banks can be rescued without being seized by the U.S. government. The Dow breached a six-year low in the holiday-shortened week amid mounting fears that the White House would nationalize banks, thus wiping out shareholders.
 
Stocks pared losses in the final hours of trading on Friday after the White House said it strongly believed in a privately held bank system. "We don't care about anything but bank details at this point," said Robert Francello, head of equity trading for Apex Capital hedge fund in San Francisco. "It's all about bank details and a bank rescue."
 
With indexes at multi-year lows, the focus will be on battered banks Citigroup (C.N) and Bank of America (BAC.N), two of the cheapest stocks on the Dow, after a top U.S. senator on Friday said short-term nationalization for some banks was possible.
 
The fate of both companies will have important consequences for the sector and the broad U.S. economy that is in the throes of an ever-deepening recession, analysts said.
"We're dependent on seeing some stability in the financial sector," said Steve Goldman, market strategist for Weeden & Co in Greenwich, Connecticut.
 
"Each day we walk into the market and we see them down 5 to 8 percent. It makes it difficult for stocks to advance." For the week, the Dow fell 6.2 percent and the S&P dropped 6.9 percent, while the Nasdaq stumbled 6.1 percent. It was the Dow's lowest close since October 2002.
 
The economy's troubles are likely to be confirmed by corporate results to be released next week by bellwethers Home Depot (HD.N), Target Corp (TGT.N) and Dell (DELL.O).
Investors will also parse through reams of data next week, including the Case-Schiller index of home prices, sales of both existing and new homes, and Friday's preliminary report on U.S. gross domestic product for the fourth quarter.
 
The Commerce Department issued an advance report on fourth-quarter GDP last month that showed the economy had contracted by a 3.8 percent annual rate.
 
The data will provide some clues as to the state of the fragile U.S. housing market, the eye of the economic storm that triggered the credit crunch. "It will be important to watch the home sales data," said Alan Gayle, senior investment strategist of RidgeWorth Investments. "If home sales are steady or they tick up ever so slightly that will be an encouraging sign."
 
Gayle added that investors should watch what is happening with the "inventory overhang" of unsold homes. But in coming days, the focus will remain squarely on Washington as Wall Street hope for details on a plan to bolster the financial sector, which suffered steep losses this week.
 
Citing unnamed U.S. Treasury sources, CNBC said the administration will release some details next week on its bank rescue plan. A Treasury spokesman told Reuters he could not immediately comment on the report.
 
Federal Reserve Chairman Ben Bernanke is set to testify on monetary policy before the Senate Banking Committee on Tuesday and Paul Volcker, a top economic adviser to President Barack Obama, testifies before a Joint Economic Committee hearing on Thursday.
 
Investors will be watching both officials for any hints about how the government will bolster banks. Details will be key, especially after Christopher Dodd, chairman of the Senate Banking Committee, told Bloomberg on Friday that the option to nationalize banks, although undesirable, was on the table.
 
Wall Street is still reeling from Treasury Secretary Timothy Geithner's failure to provide any details when he announced a bank plan.
 
"People are obviously very anxious to know what's going to be done and trillions of dollars are at stake," said Marc Groz, chief investment officer for Topos, an asset management and risk advisory firm. "It's a battle about who's going to pick up the tab.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 

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Osacar - Slumdog Millionaire Won 8 Oscar Awards

Slumdog Millionaire wins Oscar for best motion picture of the year| Danny Boyle wins best director Oscar for Slumdog Millionaire | A R Rahman wins Oscar for Original Score of Slumdog Millionaire | Slumdog Millionaire wins Oscar for best film editing | Slumdog Millionaire bags Oscar for best sound mixing | Slumdog Millionaire bags best cinematography Oscar | Slumdog Millionaire bags Oscar for best adapted screenplay

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Long queues outside jewwelerry shops now to sell

Cashing in on high prices: People lining up at jewellery shops at Zaveri Bazar in Mumbai, to sell old gold ornaments. – Paul Noronha
Suresh P. Iyengar

Mumbai, Feb. 20 People have found a golden opportunity in the sharp rise in bullion prices. Even as gold jewellery buyers seem to have almost vanished in thin air, there are long queues outside jewellery shops which buy back old gold ornaments.
Mr Nitendra Jain, Proprietor, Jugraj Kantilal & Co, one of the largest buyers and sellers of gold and silver ornaments in Zaveri Bazar, the hub of gold trade in Mumbai, said, "We have been witnessing huge crowds who have come to sell their gold jewellery for the last ten days and expect it to increase if gold prices continue to rise."
Without revealing the quantity of gold bought back, Mr Jain said, "We are open from 11.30 a.m. to 6.30 p.m. and buy back whatever people offer to us. Our rates are one per cent lower than the market price for gold."
Mr J.A. Khan, who was the last in a serpentine queue outside Jugraj Kantilal & Co, said, "Though currently there are no attractive investment options, I decided to sell some of my old family jewellery as I feel the prices have peaked and may take a beating in the short term."
Mr Khan, who was earlier involved in the jewellery business, said he would invest a portion of the proceeds in mutual funds and fixed deposit schemes.
Gold prices crossed the Rs 15,500-level to an all-time intra-day high of Rs 15,545 for 10 grams, but ended at Rs 15,490 on Wednesday. It gained further on Thursday and closed at Rs 15,660 on Friday.
Mrs Shrikant Shreelekha, homemaker, said, "I was initially reluctant to sell my old jewellery, but then thought it is the right time to do so. I plan to go in for a new design later when prices fall. I had bought these jewels when gold was hovering around the Rs 8,000 to Rs 9,500 level." Demand down
Jewellery shops which do not buy old jewels wore a deserted look despite the peak wedding season round the corner. Mr Kiran Dikshit, Manager, Tribhovandas Bhimji Zaveri, said casual buying of gold, particularly for investments and gifting, was just not happening, but compulsory buying, especially for weddings, was taking place.
"In fact, some people have advanced their jewellery purchases, anticipating that prices will go up further," he added.
Mr Prithviraj Kothari, Chairman, Riddhi Siddhi Bullions, said retail jewellery sales had slowed down and wedding demand was low compared to last year. Mr Harish Galipalli, Head of Research, Karvy Commodities, said gold prices are no longer determined by demand and supply but by investment demand and variations in rupee-dollar value.
Since prices have risen by 20 per cent in the last one month, a sharp fall is expected in the near future before an upward march again. R

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Martin Weiss: Are Fund Managers Deploying Bull Mkt Rules InA Bear Market?

They should be ashamed of themselves:

* Financial planners and investment advisors who know this crisis could last for years — and who still urge you to buy the stock of companies that a blind man could see are at death's door ...

* Mutual fund kingpins that cavalierly throw your hard-earned money at real estate and construction firms ... automakers ... banks and other companies they know are doomed ...

* Managers at trust funds, pension funds, retirement funds and college savings funds who make themselves richer investing your money in things they know will probably only make you poorer ...

 
Where do they get the nerve to charge you outrageous fees after they've destroyed your wealth?
 
Every schoolchild in America knows we're in a recession. Every New York taxi driver knows that banks, insurers, oil companies, automakers and consumer companies are getting killed.
 
And yet dozens of supposedly smart managers like Fisher Investments, Merrill Lynch, Morgan Stanley and bank trust departments are buying and holding investments that have plunged 50% ... 60 % ... or even up to 95% IN THE LAST 12 MONTHS ALONE.
 
Just look at these losers in their portfolios ...

* Citigroup: DOWN 94% ...

* AFLAC: DOWN 74% ...

* Occidental Petroleum: DOWN 45% ...

* GM: DOWN 95% ...

* Target: DOWN 48% ...

It would be laughable if it wasn't so tragic: With brain-dead investments like those, it's little wonder why, with the markets down about 40%, America's 25 largest mutual funds are down MORE: An average of 55.1%.
But WHY are all these supposedly smart investment experts making such boneheaded moves?
 
The answer is clear:
 
They're still using BULL market rules
to invest in this BEAR market!
 
That's a shame. Because with the right investments, each of the 50% losses could have been a 50% profit ... and each of the 90% losses could have been a 90% profit — all by applying our 11 bear market laws that have made investors rich in previous crises ... and that empower you to confidently use a similar approach to grow your wealth even in the worst of times.
 
And to help you do just that, I've just scheduled a very special — and completely free — online event ...

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Ingersoll Rand-Announces Plant Shut-Down

Ingersoll-Rand (India) Ltd has informed BSE that to tide over the reduction in customer orders, the Board of Directors of the Company have at its meeting held on January 29, 2009 decided to curtail the production activity at the Ahmedabad factory and authorised the Managing Director to suitably reduce the number of working days in each month as is commensurate to meet the level of reduced orders.

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Gold: Some Questions And Answers (Larry Edelson)

It's time again for me to answer some questions my readers have. Often, this kind of forum can cut right to the chase, as I directly respond to the most popular questions I'm hearing. So let's get right to them ...
Bob writes in: "Gold's broken above your key resistance level of $929. How much higher can it go, and how fast do you expect it to go up?"
 
You'll see some backing and filling of the support areas just under $929, meaning you shouldn't be surprised if there's yet another pullback. But gold's next leg up should easily exceed the prior record high of $1,034 an ounce.
Once that is accomplished, expect another pullback, then a move up to at least $1,250.
 
Longer-term, over the next three years, I expect to see gold reach at least $2,200 an ounce, and possibly much higher. Select gold mining shares and mutual funds should perform even better.
 

Neal asks me: "Do you still think the Dow bottomed last November?"
Darn good question! Yes, and no. In nominal figures, the November 20 low is still holding. While in real terms, a slight new low has formed. On the other hand, many indicators I watch — such as the advance/decline line, also indicate the November 20 low was THE low.
 
However, there's clearly too much nervousness and volatility in the markets right now to say with any certainty. I do expect the following though: One more selling panic in the Dow that could bring it down to the 7,000 level. Then, a quick turnaround followed by a multi-month rally that could easily take the Dow back over 10,000.
 
So unless you are a very short-term trader, or have guidance in that area, I would NOT be playing the short side of the stock market here, either for speculation, or as hedges.
 
Rona writes in: "Larry, the dollar seems to be defying gravity. What gives?"
 
On the surface, it looks like the dollar is strong. But stand back for a minute and consider the following: The British pound and the euro are plummeting. So is the Russian ruble and all Eastern European currencies.
 
Add in all the dollar-denominated debts that are being liquidated and paid off, and the dollar should actually be soaring. But it's not. The Dollar Index is a mere 16% above its record low set last year.
 
On a relative performance basis, that's terrible upside action in the buck. And it's a sign of what's to come. There's not one shred of doubt in my mind that the dollar is headed much, much lower.
 
Either forced lower by the marketplace, which is fully aware of the trillions in fiat money that must be printed, or by authorities who have the legal means to change and depreciate the value of the dollar to alleviate the deflationary impact of the mountain of debt out there.
 
Note: Some say Europe is in much worse shape than the U.S., and in some respects, that's true. But Europe is NOT expected to save the world, the U.S. is.
 
Couple that with the fact that most of the world lays the blame for this crisis on the U.S. and you have a geo-political situation that squarely puts U.S. authorities on the hot seat, under pressure to devalue.
 
Moreover, since a global economic recovery depends on a recovery in the U.S. — it actually behooves U.S. authorities to devalue the buck. By doing so, they can ...
 
1. Stimulate U.S. exports
2. Re-ignite inflation and rising prices, both domestically and internationally.
 
This is exactly what President Roosevelt did in 1933 when he confiscated gold, raised its price, and devalued the dollar. Almost immediately, the economy began to recover, employment picked up, and both prices and wages started rising.
 
David asks me: "I saw a report you wrote last month indicating that the price of oil had bottomed. But since then, oil has fallen further. You were wrong. You're probably wrong on deflation too. No?"
 
My cycle work relates only to timing and not price. When I say something or show a chart that indicates cycles are bottoming, it merely indicates that selling pressure is slowing. And conversely, if I say cycles are topping, it means we're entering a time period where buying pressure should be exhausting itself.
 
Cycle analysis can be very helpful as a technical tool, but only if one keeps in mind that it relates to timing, and not actual price. Other indicators should be used to determine whether the price action is consistent with the cycle models.
 
In the case of oil, although its price has fallen further, we remain in a time window where we should see downside pressure reduced, and an eventual turn back up.
 
Barbara wants to know: "Are there any life insurance policies or annuities that allow you to hold gold?"
 
None that I know of in this country; however, there are some  excellent programs based in Switzerland. You might consider looking at what the SafeWealth Group offers. They can be reached at:
www.safewealthgroup.com <http://www.safewealthgroup.com> .
 
Dick asks: "Larry, what are your latest thoughts on Asia?"
 
I'm in Asia now. There are pockets in Asia that are certainly slowing. But for the record, I will say this: The slowdown occurring in Asia is nowhere near as bad as the western press is leading you to believe.
 
Here in Bangkok, construction of new office and condo buildings continues almost unabated. Shoppers pack the malls at Paragon and Emporium. In Singapore, where I was last month, there are as many construction cranes peppered around the city as ever. And the world famous Orchard shopping district is practically elbow to elbow with people.
 
In my opinion, western analysts are most notably wrong about China. Yes, thousands of factories have shut down in China. But those western analysts totally underestimate the Chinese and their ability to handle hard times, as well as their extremely proud heritage and nationalism.
 
Not to mention the fact that the Chinese banking system is now the strongest in the world ... and that Beijing now has almost $2 trillion in cash on hand and hardly any foreign debt.
 
There is no doubt in my mind that China is going to turn back to the upside, even before the U.S.
 
Richard writes in: "Other analysts I read tell me the U.S. doesn't have any gold reserves; that Washington secretly dumped them decades ago and that Fort Knox is empty. Is there any truth to those statements?"
The U.S. Treasury has 261 million ounces of gold worth about $245.3 billion at gold's current price.
 
A large part of it is still held at Fort Knox, but not exclusively, as in the past. Today most of the gold is actually stored 50 feet below sea level in a subterranean vault under the Federal Reserve Bank of New York at 33 Liberty Street, Manhattan.
 
Sally's question: "You recommend up to 25% of investable funds be allocated to various gold investments, with the balance, 75%, in cash. But why so much cash when it's only going to lose purchasing power over time?"
 
Excellent question Sally. I do so for one main reason: Everyone needs liquid cash in this environment. And over the short-term, cash — in the form of Treasury bills with a maturity of less than one year, or a Treasury-only money market fund — is the best way to go.
 
Later, when I see the real collapse in the dollar beginning, I will likely recommend moving out of cash and into select investments that will benefit from the next big leg down in the dollar.
 
Steve wants to know: "You've talked about the central bankers of the world changing the value of money. But how could they do that?"
 
They've done it numerous times before. They did it in 1933, in 1944, in 1971, and in 1995 at the Plaza Accord. Governments and central banks have the ability to tinker with exchange rates between currencies and the value of gold to create new valuations for paper money. They can do it by manipulating the markets, or, in extreme cases, by emergency rule.
 
It is likely to happen again, and sooner rather than later. If authorities amongst the G-20 do not see signs of a turnaround soon, I believe they will start looking further into a new monetary system that will re-align the world's debtors, mainly the U.S., and the creditors. I expect this to be an ongoing effort and a major topic of the upcoming G-20 meeting on April 20.
 
I further suspect that a few years from now the world will largely be comprised of three currencies: The dollar, the euro, and a new regional currency for all of Asia

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.

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Huge volume

some one bought Nifty 6.59 lac at 2710 levels
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More help from govt to real - infra sector

Government to provide additional help to housing, infra real estate sectors, says Finance Ministry - reports
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Monday Holiday

Holiday: Mahashivratri
23rd February 2009
Monday
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News Headlines - Morning Brief

Corporate News Headline
•Tata Power has hiked its stake in Tata Communications to 2.48% from 0.9% by purchasing shares worth Rs. 1.95 bn through open-market transaction. (BS)
•TRF has received an order worth Rs 997.4 mn from the Andhra Pradesh Government for setting up a coal-handing plant. (BS)
•KLG Systel bagged an order worth Rs. 300 mn from state-run power company based in Haryana to set up thirteen 33 KV substations and lay down 33 KV and 11 KV electrical lines on turnkey basis for Uttar Haryana Bijli Vitran Nigam. (BS)

Economic and Political Headline
•Inflation declined to 3.92% for the week ended February 7, from previous week's 4.39%. (BS)
•The Finance Minister announced that he would discuss the possibility of another set of fiscal and monetary measures to counter the economic slowdown with officials and the RBI. (BS)
•The UK had a USD 4.7 bn budget surplus in January, the smallest for the month for 14 years, as the financial crisis ravaged bank profits and the recession worsened. (Bloomberg)

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Fw: Indices@20-FEB 08:38

------ SMS Text ------
From: +919320770165
Sent: Feb 20, 2009 9:06 AM
Subject: Indices@20-FEB 08:38

Indices@20-FEB 08:38
Dow
7465.95(-89.68)
NSDQ
1442.82(-25.15)
Hangseng
12764.48(-258.88)
Nikkei
7455.4(-102.25)
SGX Nifty Fut-Feb
2740(-52.00)
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35% Pay-Cuts In Wipro From April

With the recession effects slowly increasing, more and more companies are getting slowly sucked into it and have been coming up with defensive measures to feel the minimum heat. Now, there is news about the major giant Wipro which has always been considered as the safest bet for employees.
It is now being said that the company has decided to go in for salary cuts and if new is to be believed then starting this April, the salaries will be going down by 35% from the existing pays. However, this is the highest meridian so the rest will have a cut anywhere between the range of 20%-35%.
This move is being seen across as a cost saving measure and inside reports say that the employees have no qualm in this new development since they feel that having a job is more than enough at this point of time. However, there are those who are feeling the pinch of it due to their financial commitments and other liabilities.
 
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Entertainment sector to witness boom in next few years

The media and entertainment industry is likely to grow at 12.5 percent
over the next five years to cross the Rs 1,00,000-crore mark,
according to a FICCI-KPMG report on the industry.
"Over the next five years, the industry is projected to grow at 12.5
percent to reach the size of Rs 1,05,200-crore (Rs 1,052-billion) by
2013," said the report released on Tuesday..

The Indian media and entertainment industry stood at Rs 58,400 crore
in 2008, up 12.4 percent over the previous year.

The report added that the economic slowdown has affected advertising
revenues of segments like television, print, radio and outdoor,
particularly in the last quarter of 2008.

The market environment has become increasingly challenging and could
affect the industry this current year too, it said.

The projected 12.5 percent growth for the media and entertainment
industry will be driven by factors like favorable demographics, long-
term fundamentals of the economy, expected rise in advertising to GDP
ratio and increasing media penetration, the report said.

Of the different segments of the industry, television forms the
biggest chunk with revenues worth Rs 24,100 crore in 2008, a growth of
14.2 percent over 2007. Revenues from television are projected to grow
to Rs 47,300 crore by the year 2013, the report said.

The film industry grew 13.4 percent in 2008 over the previous year and
posted revenues of Rs 10,900 crore. It is projected to reach the size
of Rs 16,800 crore by 2013.

At the same time on the sidelines of the Federation of Indian Chambers
of Commerce and Industry (FICCI) Frames 2009, the , Minister of State
for Information and Broadcasting and External Affairs Anand Sharma
said The Central Government will take up with the Empowered Committee
on VAT (Value Added Tax) the media and entertainment industry's demand
for subsuming entertainment tax in the Goods and Services Tax (GST),
which is slated for introduction from April 2010.

Mr. Sharma said, "We will consider the entertainment industry's
demand, articulated by FICCI, for inclusion of entertainment tax in
GST itself, so that there is single tax on the industry.

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File belated tax return with a cool head!

Have you missed the train?? The tax train, that is!! If you have missed filing your tax return, do not despair...you can still file a 'belated

 
return'. The Indian tax authorities are always ready to give you a second chance!

In case of financial year beginning 1 April 2007 and ending on 31 March 2008, the due date for filing the income tax return for individuals whose total income exceeded the maximum amount which is not chargeable to tax (and who does not have to get the accounts audited) was 31 July 2008. For those of us who managed to meet the deadline, a job well done - for others, there is no real reason for you to worry. You can still file your return which will be considered as a valid tax return, but just that is would be treated as a 'belated return'.

Some major implications of filing a Belated Return

For the financial year ended 31 March 2008, the belated return can be filed up to two years from the end of financial year, which is up to 31 March 2010. However, there are riders attached to filing a belated tax return. Otherwise, there would be no point in the tax authorities spending so much on advertising the deadline of 31 July 2008.

If you file your return after one year from the end of financial year, that is after 31 March 2009 (for returns pertaining to financial year ended 31 March 2008), there is an exposure to penalty of Rs 5,000 depending on the discretion of the revenue authorities. This penalty will not apply if you file your tax return before 31 March 2009.

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CRISIL upgrades ING Liquid Plus Fund to ‘AA+f’

CRISIL has upgraded its rating on ING Mutual Fund's ING Liquid Plus
Fund
to 'AA+f' from 'A+f', to reflect the improvement in credit quality of
the scheme's holdings. The 'AA+f' rating indicates that the scheme's
portfolio will provide 'strong' protection against losses arising from
credit defaults.
Earlier on Nov 14, 2008, CRISIL had downgraded the scheme's rating to
'A+f' from 'AAAf', following deterioration in the credit quality of
the scheme's holdings.
CRISIL's rating is not an opinion on fund manager ING Investment
Management (India)'s willingness or ability to make timely payments to
investors, or on the stability of the fund's net asset values (NAVs),
as the NAVs could vary with market developments.

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FII & DII trading activity on NSE and BSE as on 19-FEB-2009

FII trading activity on NSE and BSE on Capital Market Segment

The following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 19-Feb-2009.



FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category Date Buy Value Sell Value Net Value
FII 19-Feb-2009 809.57 1173.05 -363.48
 
 

Domestic Institutional Investors trading activity on NSE and BSE on Capital Market Segment


The following is combined Domestic Institutional Investors trading data across NSE and BSE collated on the basis of trades executed by Banks, DFIs, Insurance and MFs on 19-Feb-2009.


DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category Date Buy Value Sell Value Net Value
DII 19-Feb-2009 578.54 470.1 108.44

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