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When you post a link here, pls write 1-2 lines about the link as an introduction.
MT: Finance Articles, useful Web links
MT: Finance Articles, useful Web links
Full text of Finance Minister speech during budget presentation..
http://www.hindu.com/nic/budget2007.htm
http://www.hindu.com/nic/budget2007.htm
MT: Finance Articles, useful Web links
FundwireOut Goes the MINBy Research Desk | Mar 02, 2007 | Email article to a friend
Soon after the Budget announcement, the Association of Mutual Funds in India (AMFI) has cancelled the need to have a MIN. AMFI has issued a press release stating that MIN stands withdrawn effective March 2, 2007.
Instead, investors will now only have to give their PAN and such certain other documents and information to comply with KYC norms under the Prevention of Money Laundering Act (PMLA).
What exactly is KYC? Basically, it is just an acronym for "Know your Customer", a term commonly used for the customer identification process. SEBI has prescribed certain requirements relating to KYC norms for financial institutions, financial intermediaries and mutual funds. This could be in the form of verification of identity and address, financial status, occupation and such other personal information.
AMFI had requested investors investing more than Rs 50,000 at a time in a mutual fund to produce a MIN. Now, the PAN will be the only identification and reference number.
Soon after the Budget announcement, the Association of Mutual Funds in India (AMFI) has cancelled the need to have a MIN. AMFI has issued a press release stating that MIN stands withdrawn effective March 2, 2007.
Instead, investors will now only have to give their PAN and such certain other documents and information to comply with KYC norms under the Prevention of Money Laundering Act (PMLA).
What exactly is KYC? Basically, it is just an acronym for "Know your Customer", a term commonly used for the customer identification process. SEBI has prescribed certain requirements relating to KYC norms for financial institutions, financial intermediaries and mutual funds. This could be in the form of verification of identity and address, financial status, occupation and such other personal information.
AMFI had requested investors investing more than Rs 50,000 at a time in a mutual fund to produce a MIN. Now, the PAN will be the only identification and reference number.
CDSL Ventures Limited (CVL), a wholly owned subsidiary of Central Depository Services (India) Limited, was given the task of issuing the MIN. CVL had, in turn, appointed entities to act as Points of Service (POS) - official offices to accept and verify documents and generate a MIN.
The AMFI press release said that in order to help investors submit the required documents and information just once, the current system of providing the documents and information at POS of CVL will continue. However, no new number will be issued.
MT: Finance Articles, useful Web links
Folks,
Here is a great website where one can take courses on Stocks, Bonds, Mutual Funds & Portfolio - Absolutely Free.
http://www.morningstar.com/Cover/Classroom.html?t1=1173112294
Please give your valuable feedback after taking classes.
Here is a great website where one can take courses on Stocks, Bonds, Mutual Funds & Portfolio - Absolutely Free.
http://www.morningstar.com/Cover/Classroom.html?t1=1173112294
Please give your valuable feedback after taking classes.
MT: Finance Articles, useful Web links
LoveIndia;10608Folks,
Here is a great website where one can take courses on Stocks, Bonds, Mutual Funds & Portfolio - Absolutely Free.
http://www.morningstar.com/Cover/Classroom.html?t1=1173112294
Please give your valuable feedback after taking classes.[/quote]
Fantastic website.....Thanks a ton loveindia......
MT: Finance Articles, useful Web links
b2b;10625Fantastic website.....Thanks a ton loveindia......
B2B - You are welcome. Right now, I am at the verge of completion of 'Stocks' class and have got good credits. Let's see whether we will reach 790 points.
MT: Finance Articles, useful Web links
CONCERNED over a possible shakeout in the home loan market, Reserve Bank of India (RBI) has asked several leading banks to furnish data on the number of borrowers who have bought second or third home, how many them belong to the salaried class and the default levels in home loans.
RBI spying on home loan borrowers
RBI spying on home loan borrowers
MT: Finance Articles, useful Web links
b2b;11176
RBI spying on home loan borrowers[/quote]
"The fear is that once the property bubble bursts, borrowers who have invested in second or third homes to earn a fat rent could default, as tenants relocate to properties where the rent is lower. At that point the properties that have been pledged with the banks may not be adequate to cover loan exposure."
Rising interest rates coupled, supply out-stripping demand, speculators in the mkt (apts) coupled w/ a healthy economy and steady jobs is good mix if one is looking to invest in a bear mkt :emgift:
There could be some good pickings for R2I'ers in the next 12 to 18 months. I wanted to stay away from apts. I was planning to rent after R2I'ing (because the apt. segment is currently over-heated), but now I'm rethinking...
MT: Finance Articles, useful Web links
Folks - Here is a website for finance gurus - Books by Prof. Damadaran who has written extensively on Valuation, Corporate Finance & Investments.
http://pages.stern.nyu.edu/~adamodar/
Most of his books can be viewed online on his website. Please give your valuable feedback.
http://pages.stern.nyu.edu/~adamodar/
Most of his books can be viewed online on his website. Please give your valuable feedback.
MT: Finance Articles, useful Web links
http://economictimes.indiatimes.com/India_headed_for__economic_slowdown/articleshow/1912781.cms
==============
The world economy is headed for a slowdown -- this is the prediction that many market experts are making. The US seems to be headed for a recession; China is prone to a hard landing, while some other emerging markets, too, look vulnerable. Risk appetite for emerging market equities is on the decline and India is showing early signs of a growth scare. Asian Development Bank (ADB) forecasts developing Asian economies to grow by 7.6% in '07, contracting from the 8.3% growth in '06. The International Monetary Fund (IMF) expects most economies, except Japan and the UK, to slow down in '07, but it expects advanced economies to recover in '08.
The consensus, at present, seems to indicate that the US economy is headed for a slowdown. The economy is moving from 'high growth, low inflation' to 'low growth, high inflation'. "It's over. It's all over, as of now," says global cycles guru Robin Griffiths, head of asset allocation at UK-based fund management company Rathbones. Other global cycles experts have the same story to tell -- the peak is behind us.
New York-based Cycles Research CEO Bill Sarubbi, who has gained credibility in predicting movements accurately for a couple of decades, says, "My charts show that the peak has been formed and it's time to go down the curve. Sharp corrections are expected in June and September/October. There is no new peak in sight till late '08." He looks at a logarithmic chart of the Dow Jones Industrial Index, which reveals that we may be in for some correction, followed by a recovery, which is the final leg for the downtrend.
For an investor, buying equities when the market is about to enter a bear phase is like jumping on to the road just as the light turns red. It's here that global cycles provide a cue. A business cycle, interchangeably used for economic cycles in a market-oriented economy, is the periodic, but irregular up-and-down movements in economic activity. It does not follow a particular pattern with regular intervals, so it is highly unpredictable. The duration of business cycles varies. There can be a short-term business cycle with 3-5 years, medium term with 7-11 years, long-term with 15-25 years and even a cycle of 45-100 years.
Currently, business cycles are more predictable across the globe because international economic interdependence has increased along three dimensions. The first is international trade in goods and services, which is the 'traditional' channel through which economies may affect each other. The second type of link comprises international trade in financial assets, such as equity and bonds, and cross-border credit relations.
Cross-border holdings of portfolio assets have mushroomed in recent years. The third dimension of interdependence is the internationalisation of production through foreign direct investment (FDI). The outstanding global stock of FDI more than doubled from 8.3% of world GDP in 1990 to 17.5% in '00. At present, about 18% of the global output is produced by foreign-controlled firms. So, in case there's a slowdown in the US, its impact will be felt across the world.
Many experts have determined peaks and troughs in business cycles through well laid-out charts. Only the length of the study differs. Some experts follow short-term business cycles, while others follow a longer cycle. Usually, short-term business cycles are part of larger business cycles.
The research undertaken by the Princeton Economic Institute provides more insights. It states that the beginning of the end starts when you witness a top everywhere and then, confusing signs or uncertainty or reduced risk appetite become visible. At present, low-cost money followed by high inflation, record M&A activity, mind-boggling bonuses, accelerating FII inflows, increase in hedge funds and their assets under management, private equity deals, and high appreciation in asset markets are some factors. All these are cooling off from their recent highs. We are currently in confusing times.
The Dow Theory has the same story to tell about the US market and it could have lessons for other markets too. The theory suggests that there are three clear trends and currently, the market is in Trend 3. This is a trend where prices drop significantly, reverse sharply and then continue moving down. This indicates that each trend has three stages -- distribution, big move and despair.
Having talked about global cycles, let's take a look at India. Since 1991, liberalisation of the Indian economy meant that we started taking cues from international scenarios. As the domestic economy became more market-oriented, the business cycle theories became more visible. In the post-liberalisation era, the thrust was on services and industrial sectors. Their proportion to total GDP escalated, compared to agriculture, and business cycles became more visible. In India, the business cycle has averaged around six years and the last recession was observed in '01 and '02, when the global economy witnessed a slowdown.
India is likely to grow at a slower-than-expected rate in '07-08. "In the case of India, we are in the bear part of the cycle. The bear is more like a long-drawn-out plateau, in which there's some buying before the secular trend resumes again. The P/E tends to come down more than the stock prices. But the ultimate outcome is a downtrend," says Mr Griffiths
The Indian economy has witnessed a paradigm shift from a low level of growth, to a medium growth phase, and it's all set to enter the high growth phase. But there are concerns on the levels it can attain. ADB estimates an 8% rise for '07, while IMF projects an 8.4% growth, which is further expected to slow to 7.8% in '08. "We cannot see the Indian market and the economy in isolation, as they are highly integrated with global markets these days," says Rupa Rege-Nitsure, chief economist, Bank of Baroda.
"Single-digit growth in exports, slowdown in production of consumer durables and power generation are some leading indicators for likely slowdown of the Indian economy in '07-08." Another way to look at the Indian cycle is through the leading index calculated by DSE-ECRI (Delhi School of Economics and Economic Cycle Research Institute, New York). The index has fallen and its growth rate slipped to zero percent in December '06, implying a bearish outlook for the Indian economy.
The reasons for this fall are important. This leading index was supported by a slowdown in credit offtake, inverted or flattened yield curve (i.e. short-term interest rates are higher or equal to long-term interest rates), inflationary pressures, rising raw material costs and commodity prices putting a pressure on corporate margins, higher public debt/GDP ratio and a jittery stock market.
Pami Dua, professor at Delhi School of Economics, says, "The outlook for the Indian economy has dulled a bit, but it has not yet shown signs of a serious downturn. The currently constructed India leading index has not factored in the effect of the latest interest rate hikes. But it will have an impact on consumption demand." Tightening monetary policy measures -- which were adopted to deal with rising inflationary pressure -- and a boom in real estate prices have amplified general interest rates. That could have an effect on genuine consumption and investment demand.
In addition, rising interest rates, liquidity crunch in the system and absence of the RBI in the foreign exchange (forex) market have helped the rupee to move up. Domestic consumption, investment demand and external demand are the main pillars of the current growth cycle. Any threat to them could push India on to a moderate growth path. Tough times lie ahead.
BUSINESS CYCLES AND INDICATORS
Any business cycle consists of four different phases on a sequential basis:
1) Contraction: This is a phase in which the pace of economic activity slows down. The economy may post a growth lower than potential growth or trend line growth. If the contraction is very severe, the economy is said to enter into a recession.
2) Trough: This is the lower turning point of a business cycle, where a contraction turns into an expansion.
3) Expansion: During this phase, economic activity accelerates and grows even higher than the potential growth rate.
4) Peak: This is the upper turning of a business cycle, followed by contraction.
Identifying or predicting the movement of a business cycle in the current situation (i.e. identifying real time business cycles) is difficult. The periodic data released on economic indicators can be used to estimate a business cycle. These indicators are broadly categorised as leading, lagging, or coincident, which indicates the timing of their changes relative to how the economy as a whole changes.
Leading : Leading economic indicators are those which change before the economy changes. These indicators reflect a downturn before the economy declines and they improve before the economy begins to pull out of a recession. Changes in investments, inventory levels and capital formation, supply of money and credit, government spending and tax policies, and relations among prices, costs and profits are a few leading indicators. All these factors influence the market, so stock market returns are also commonly used leading indicators. An understanding of these drivers can help identify the predictors of the downturns and upturns.
Lagged : A lagged economic indicator is one that does not change direction until a few quarters after the economy does. The unemployment rate is a lagged economic indicator, as unemployment tends to increase for 2-3 quarters after the economy starts to improve.
Coincident : A coincident economic indicator is one that simply moves at the same time as the economy. The gross domestic product (GDP) and trade cycles are coincident indicators.
==============
The world economy is headed for a slowdown -- this is the prediction that many market experts are making. The US seems to be headed for a recession; China is prone to a hard landing, while some other emerging markets, too, look vulnerable. Risk appetite for emerging market equities is on the decline and India is showing early signs of a growth scare. Asian Development Bank (ADB) forecasts developing Asian economies to grow by 7.6% in '07, contracting from the 8.3% growth in '06. The International Monetary Fund (IMF) expects most economies, except Japan and the UK, to slow down in '07, but it expects advanced economies to recover in '08.
The consensus, at present, seems to indicate that the US economy is headed for a slowdown. The economy is moving from 'high growth, low inflation' to 'low growth, high inflation'. "It's over. It's all over, as of now," says global cycles guru Robin Griffiths, head of asset allocation at UK-based fund management company Rathbones. Other global cycles experts have the same story to tell -- the peak is behind us.
New York-based Cycles Research CEO Bill Sarubbi, who has gained credibility in predicting movements accurately for a couple of decades, says, "My charts show that the peak has been formed and it's time to go down the curve. Sharp corrections are expected in June and September/October. There is no new peak in sight till late '08." He looks at a logarithmic chart of the Dow Jones Industrial Index, which reveals that we may be in for some correction, followed by a recovery, which is the final leg for the downtrend.
For an investor, buying equities when the market is about to enter a bear phase is like jumping on to the road just as the light turns red. It's here that global cycles provide a cue. A business cycle, interchangeably used for economic cycles in a market-oriented economy, is the periodic, but irregular up-and-down movements in economic activity. It does not follow a particular pattern with regular intervals, so it is highly unpredictable. The duration of business cycles varies. There can be a short-term business cycle with 3-5 years, medium term with 7-11 years, long-term with 15-25 years and even a cycle of 45-100 years.
Currently, business cycles are more predictable across the globe because international economic interdependence has increased along three dimensions. The first is international trade in goods and services, which is the 'traditional' channel through which economies may affect each other. The second type of link comprises international trade in financial assets, such as equity and bonds, and cross-border credit relations.
Cross-border holdings of portfolio assets have mushroomed in recent years. The third dimension of interdependence is the internationalisation of production through foreign direct investment (FDI). The outstanding global stock of FDI more than doubled from 8.3% of world GDP in 1990 to 17.5% in '00. At present, about 18% of the global output is produced by foreign-controlled firms. So, in case there's a slowdown in the US, its impact will be felt across the world.
Many experts have determined peaks and troughs in business cycles through well laid-out charts. Only the length of the study differs. Some experts follow short-term business cycles, while others follow a longer cycle. Usually, short-term business cycles are part of larger business cycles.
The research undertaken by the Princeton Economic Institute provides more insights. It states that the beginning of the end starts when you witness a top everywhere and then, confusing signs or uncertainty or reduced risk appetite become visible. At present, low-cost money followed by high inflation, record M&A activity, mind-boggling bonuses, accelerating FII inflows, increase in hedge funds and their assets under management, private equity deals, and high appreciation in asset markets are some factors. All these are cooling off from their recent highs. We are currently in confusing times.
The Dow Theory has the same story to tell about the US market and it could have lessons for other markets too. The theory suggests that there are three clear trends and currently, the market is in Trend 3. This is a trend where prices drop significantly, reverse sharply and then continue moving down. This indicates that each trend has three stages -- distribution, big move and despair.
Having talked about global cycles, let's take a look at India. Since 1991, liberalisation of the Indian economy meant that we started taking cues from international scenarios. As the domestic economy became more market-oriented, the business cycle theories became more visible. In the post-liberalisation era, the thrust was on services and industrial sectors. Their proportion to total GDP escalated, compared to agriculture, and business cycles became more visible. In India, the business cycle has averaged around six years and the last recession was observed in '01 and '02, when the global economy witnessed a slowdown.
India is likely to grow at a slower-than-expected rate in '07-08. "In the case of India, we are in the bear part of the cycle. The bear is more like a long-drawn-out plateau, in which there's some buying before the secular trend resumes again. The P/E tends to come down more than the stock prices. But the ultimate outcome is a downtrend," says Mr Griffiths
The Indian economy has witnessed a paradigm shift from a low level of growth, to a medium growth phase, and it's all set to enter the high growth phase. But there are concerns on the levels it can attain. ADB estimates an 8% rise for '07, while IMF projects an 8.4% growth, which is further expected to slow to 7.8% in '08. "We cannot see the Indian market and the economy in isolation, as they are highly integrated with global markets these days," says Rupa Rege-Nitsure, chief economist, Bank of Baroda.
"Single-digit growth in exports, slowdown in production of consumer durables and power generation are some leading indicators for likely slowdown of the Indian economy in '07-08." Another way to look at the Indian cycle is through the leading index calculated by DSE-ECRI (Delhi School of Economics and Economic Cycle Research Institute, New York). The index has fallen and its growth rate slipped to zero percent in December '06, implying a bearish outlook for the Indian economy.
The reasons for this fall are important. This leading index was supported by a slowdown in credit offtake, inverted or flattened yield curve (i.e. short-term interest rates are higher or equal to long-term interest rates), inflationary pressures, rising raw material costs and commodity prices putting a pressure on corporate margins, higher public debt/GDP ratio and a jittery stock market.
Pami Dua, professor at Delhi School of Economics, says, "The outlook for the Indian economy has dulled a bit, but it has not yet shown signs of a serious downturn. The currently constructed India leading index has not factored in the effect of the latest interest rate hikes. But it will have an impact on consumption demand." Tightening monetary policy measures -- which were adopted to deal with rising inflationary pressure -- and a boom in real estate prices have amplified general interest rates. That could have an effect on genuine consumption and investment demand.
In addition, rising interest rates, liquidity crunch in the system and absence of the RBI in the foreign exchange (forex) market have helped the rupee to move up. Domestic consumption, investment demand and external demand are the main pillars of the current growth cycle. Any threat to them could push India on to a moderate growth path. Tough times lie ahead.
BUSINESS CYCLES AND INDICATORS
Any business cycle consists of four different phases on a sequential basis:
1) Contraction: This is a phase in which the pace of economic activity slows down. The economy may post a growth lower than potential growth or trend line growth. If the contraction is very severe, the economy is said to enter into a recession.
2) Trough: This is the lower turning point of a business cycle, where a contraction turns into an expansion.
3) Expansion: During this phase, economic activity accelerates and grows even higher than the potential growth rate.
4) Peak: This is the upper turning of a business cycle, followed by contraction.
Identifying or predicting the movement of a business cycle in the current situation (i.e. identifying real time business cycles) is difficult. The periodic data released on economic indicators can be used to estimate a business cycle. These indicators are broadly categorised as leading, lagging, or coincident, which indicates the timing of their changes relative to how the economy as a whole changes.
Leading : Leading economic indicators are those which change before the economy changes. These indicators reflect a downturn before the economy declines and they improve before the economy begins to pull out of a recession. Changes in investments, inventory levels and capital formation, supply of money and credit, government spending and tax policies, and relations among prices, costs and profits are a few leading indicators. All these factors influence the market, so stock market returns are also commonly used leading indicators. An understanding of these drivers can help identify the predictors of the downturns and upturns.
Lagged : A lagged economic indicator is one that does not change direction until a few quarters after the economy does. The unemployment rate is a lagged economic indicator, as unemployment tends to increase for 2-3 quarters after the economy starts to improve.
Coincident : A coincident economic indicator is one that simply moves at the same time as the economy. The gross domestic product (GDP) and trade cycles are coincident indicators.