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FINANCIAL VOICE
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India's GDP growth slows to 6.1% in Jan-March
India overtakes China to top global retail index
Asian Voice | 10th June 2017
Consultant Editor Financial Voice Alpesh Patel Dear Financial Voice Reader, ‘More Money Monthly’ could be a mantra for the ‘JAMs’ the ‘just about managing’. But actually there are many reasons people trade online. The key to success, as the UK election reminds us, we are not here to gamble, and ‘Make More Money Monthly’ does not mean act desperately. To make your trading (more) profitable and professional these are the key attributes from both my expertise as a private investor turned hedge fund manager. The advice I give is based on not just my experiences, chronicled each week in the Financial Times ‘Diary of an Internet’ column for 5 years, but also formed from my initial learnings from 10 of the worlds leading traders who became part of my book, the Mind of a Trader, which in turn the FT published and led Bloomberg to give me my own show. When I used those skills to win a competition in the Financial Times to forecast the markets and made the front page as ‘Top FTSE forecaster’ the obvious step was to step up and set up my own hedge fund with my new found increased fame. Oh, and launch my own software, which then went on to beat Warren Buffett since 2004 – by a lot. So enough about my credentials – what about the best advice to you. Trading is not gambling. The trader trades very small position size relative to his capital. The gambler will trade large size The trader does a lot of small trades The gambler will do a few big trades The trader follows trends established in the market The gambler steps in front of market reaction and guesses the outcome of news The trader never adds to a losing position The gambler doubles down on losses, so strong is his fear of losses – he actually makes them worse The trader adds to his winning positions, knowing he is then not risking capital but only profits The gambler takes flight at the first sign of profit The trader knows a stop loss is essential and should be outside the zone of market noise. The gambler has no stop loss or it is far away as to be redundant A string of losing trades would mean the trader is down 2-3% on his total risk capital For the gambler a string of losing trades, and he is down 40% There are a few simple techniques, repeated ad nauseam, will professionalise your trading. Of course, this is completely if you are just trading with your risk capital for a bit of fun. That is perfectly acceptable. You may be just trading because you think the market is completely wrong on the price of oil, or that Gold should not be so cheap, or that surely the USD has to fall with the rest of the US market. Trading for fun is fine. But do not mix your fun and your professional accounts. In fact, keep two!
Indian cos created over 171,000 jobs in Apac nations The Indian government informed countries in the Asia-Pacific (Apac) region that Indian companies have created at least 171,000 local jobs in nine countries with very few Indian requiring work permits. The issue was recently brought to light with countries negotiating the Regional Comprehensive Economic Partnership agreement, including China, Japan, South Korea, Australia, New Zealand, and ASEAN nations. While the foreign negotiators seek steep reduction in import duties in India, they are unwilling to allow Indian professionals like software engineers and architects, on work visas or even commit to easier investment rules for Indian companies. Seeking to impress these
countries, the Indian government pointed out that not only do Indian professionals contribute to their economies but companies such as Infosys, Wipro, TCS, and HCL also create thousands of jobs. Visa restrictions have risen in the past few years and the government is accusing the Singapore government of going back on its commitment to allow Indian professionals, despite committing to it in the bilateral trade and investment treaty. Sources said during a recent interaction between the government and representatives of companies operating in the Philippines, it came to light that Indian IT firms had created close to 60,000 local jobs but needed only 1,500-2,000 work permits.
In a major indication that Prime Minister Narendra Modi's demonetisation move may have hit the economy harder than it let on, the country's Gross Domestic Product in the January-March quarter grew at the slowest pace in at least four quarters at 6.1 per cent as against a 7 per cent growth in OctoberDecember. However, the GDP growth rate was kept unchanged at 7.1 per cent for the 2016-17 financial year, despite expectations that the revision of GDP in line with the new series of the Wholesale Price Index and the Index of Industrial Production would yield a higher growth rate of around 7.6 per cent. Construction sector reflected a sharp contraction while financial services sector grew at singledigit pace during the fourth quarter. The unchanged 7.1 per cent growth for the last financial year has come on the back of a significant upward revision in growth for April-June quarter, with GDP growing at 7.9 per cent in the revised series as against 7.2 per cent in JanMarch growth slows down to just above 6 per cent growth estimated earlier.
According to the new series, while GDP growth was recorded at 7.5 per cent in July-September compared with earlier estimate of 7.4 per cent, it was unchanged at 7.0 per cent for October-December quarter. Gross Value Added growth, which is GDP minus net taxes and serves as a more closely watched estimate for quarterly growth also fell sharply to 5.6 per cent in JanuaryMarch from 8.7 per cent last year and 6.7 per cent in October-December. Chief Technician TCA Anant said the impact of demonetisation on GDP needs to be studied in detail. “Analysis of policies like demonetisation cannot be done through simple post hoc ergo propter hoc. Because it is after this, so it is because of this... impact
analysis of a policy is an extremely sophisticated field in econometrics. I would caution against reading a single number which comes after an event as being reflective of the consequences of the event,” he said. Demonetisation cannot be identified as the sole reason for slowdown as several factors were at play, finance minister Arun Jaitley said. He asserted that 7-8% growth was “fairly reasonable“ against the backdrop of the current global situation. “There are several factors which can contribute to GDP in a particular quarter. There was some slowdown visible given the global and domestic situation even prior to demonetisation last year,” Jaitley told a news conference to mark three years of the Modi government. “There was impact of global factors. There could be some impact in one quarter or two quarters of one particular factor (demonetisation),” the FM said. He added that the services sector particularly financial services, which had witnessed 9-10% growth - had slowed.
Kingfisher House auction fails again Lenders' attempt to auction Kingfisher House, the erstwhile headquarters of Vijay Mallyaowned, now defunct Kingfisher Airlines, proved to be a damp squib for the fifth time, despite cut in the reserve price. The 17-lender consortium led by State Bank of India had lowered the reserve price of the property by 10 per cent to £9.35 million from £10.35 million in the previous auction held in March. Before that, in December auction, the reserve price was set at £11.5 million. "There were lot of enquires for the property from buyers but none of them deposited the bids in
the latest auction," said a banker. Lenders had tried to auction the property for the first time in March last year with a reserve price of £15 million and for the second time in August at £13.5 million. Multiple attempts to sell Kingfisher House failed, even after 38 per cent reduction in the reserve price in various auctions since March last year. The property is located
in the plush Vile Parle area near the Mumbai airport. According to bankers, the property has a huge commercial potential as it is located near airport. "The total size of the plot is 2,400 sq mt and the construction is only on 400 sq mt, which leaves 1,600 sq mt area for development. Four floors are already there and permission for construction of fifth floor is also there. This gives buyers enough scope for redevelopment of the property," said a banker. In April this year, the 17-lender consortium had managed to sell another prime property of Mallya, Kingfisher Villa, in Goa through a private treaty.
India has surpassed China to secure top position among 30 developing countries on ease of doing business. The 16th edition of the 2017 Global Retail Development Index titled 'The Age of Focus' put India on top citing its rapidly expanding economy, easing of foreign direct investment rules, and a consumption boom as key drivers. “The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential,” said Management Consulting firm AT Kearney. India's retail sector has been growing at an annual rate of 20 per cent. Total sales surpassed the $1 trillionmark last year, and the sector is expected to double in size by 2020. The group said rapid urbanisation and a growing middle class with higher income levels is driving up consumption across the country. The government's continued support to relax FDI regulations in key areas of the retail sector have provided further boost to its growth. “India's top ranking is a clear vote of confidence in its retail market and vast growth potential,” said Debashish Mukherjee, Partner with AT Kearney and Head of the Consumer Industries & Retail Products Practice for India. The government, the past year, has allowed 100 per cent foreign ownership in B2B e-commerce businesses and for retailers that sell food products. India's retail sector has also benefited from the rapid growth in ecommerce.
Banking consolidation via closure, merger soon: Uday Kotak Kotak Mahindra Bank MD, Uday Kotak has raised alarm on the precarious situation in the banking industry, saying that the current industry structure is not sustainable. He said consolidation is on the cards, either through closure of banks or mergers. In a letter sent to shareholders in Kotak Bank's annual report, he wrote, “The system's inability to recognise the inconvenient truth that banking is an
economic and commercial activity with high leverage, and years of 'kicking the can down the road' in highrisk areas, mixing of social objectives and weak governance, have all contributed to bringing this industry to a weak position.” He said that while entry norms have been relaxed in financial services, including banking, there is a need to give more thought to “morality and exits in this sector with
potential systematic risks. The time has now come to bit the bullet. The state, sooner or later, may have to make the difficult choice between putting in more good money after bad or being open to 'strategic' choices. I wonder whether that can happen now or sometime after 2019.” He highlighted finance sector trends in FY17, saying there has been a “formalisation” of financial savings due to positive real
interest rates and demonetisation. Kotak also indicated that his bank would look for growth opportunities. “We will try and play an active role in reshaping the structure of the financial services industry- be it stressed assets or consolidation. On the organic side, we aspire to grow, at least, two times nominal GDP growth in most of businesses. We need to gain share and be relevant.”