FBI 18th May 2012

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Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills

am grateful for the opportunity to launch this year's magazine. This year is a particularly special year, and sees us celebrating the Queen's Diamond Jubilee, the 2012 Olympics, and the 40th anniversary of Asian Voice. Over the past two years we have seen consistently low growth, and high unemployment, now above 2.6million, with youth unemployment above a million. The Government will be borrowing at least £46bn more over the course of this Parliament than they planned. It is the opinion of my party that while the deficit must be reduced, we are cutting too far, and too fast. We need a plan for growth. These are times of great uncertainty. But there is one place we can reliably look to for expansion and innovation even in these troubled times - the ethnic minority community. Throughout the UK more than a quarter of a million ethnic minority enterprises are contributing around £20 billion a year to the British economy. Indeed, ethnic minority communities are twice as likely to start businesses. There has been a major shift in the scale, complexity and diversity of firms owned and run by people from minority ethnic backgrounds. An increasing number of ethnic minority entrepreneurs are running successful multi million pound companies in many different sectors, from banking and financial services, to media, fashion and computer manufacturing. As Shadow Secretary of State for Business, Innovation and Skills I believe that with the right steps, the economy can recover. We have put forward our five point plan to get demand and growth back into our economy – including tax breaks for small businesses taking on extra workers, a temporary VAT cut, and a tax on bank bonuses to fund 100,000 jobs for young people. These measures enjoy wide support amongst business – they should be adopted without delay. Asian businesses, which are such a vital part of our economy, will be essential to that recovery. I am delighted to introduce this year’s Finance, Business and Insurance edition of Asian Voice, which will explore the challenges we face today, in order to work towards a better tomorrow.


Asian Voice & Gujarat Samachar


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When the going gets tough, tough gets going 4 years after the credit crunch, subsequent to the greed of some US lenders or their folly, the economy is in doldrums. Let's be honest, it is in a very delicate state in the UK, Europe and other countries. When the Western world is suffering from influenza, inevitably the SMEs, especially owned by the Asians, will have some sneezing. From all the indications available, Asians have not only survived but managed rather well in this economic climate. Our traditional business accumen coupled with education, confidence and ambition of younger generation, Asian entrepreneurship is diversifying well, while consolidating their existing enterprises. The prospects in new horizons, ie green businesses have a vast potential. Perhaps one with discerning eyes can see some bright spots. Similarly traditional businesses- retail, wholesale, distribution and manufacture have always created opportunity for those who can produce or deliver better, faster and more economically. Let's remember that steel and iron industry was not the flavour of the period when Lakshmi Nivas Mittal entered the field and with his innovatory skills and zeal made Arcelor Mittal the talk of the town, let's say the world. There are several such inspiring examples in mineral exploration as well as service industry including IT and pharmaceuticals from India. It is no wonder that cash rich Indian companies are investing in such huge volumes abroad. The young Asians born abroad especially in the UK and USA are also not risk averse per say. More and more of them are occupying important positions in the financial sectors in several countries. Race is not a problem for excellence- Anshu Jain of Deutsche bank, Arun Sarin of Vodafone, Indira Nooyi of Pepsi, similarly in the media both print and electronic like Mihir Bose, Rajini Vaidyanathan, Jamal Mohammad, Fareed Zakaria, we see a rising number of Asian men and women from India, Pakistan, Bangladesh, Sri Lanka, which would have been surprising even 10 years ago. Our 12th edition of Finance, Bank, Insurance (FBI) special to be released by Chuka Umunna itself is a milestone, at least to the extend that our Chief Guest has risen so rapidly in the sector that has so much of a cut throat competition. He like many other non whites have

achieved what they have, not because of positive discrimination, or preferential treatment. Meritocracy is one of the strongest pillars of free market economy and democracy. This FBI special like its predecessor is not a comprehensive treatise on the subject, but, if it can open some eyes to the vast vista awaiting our initiative, efforts of our team especially George, Harish, Ajay, Alka, Rupanjana and others may have been worthwhile. Purpose is there, performance is for you to judge, but we have tried. In our 40 years we have continuously tried to serve our readers to the best of our ability. We adhere to some standards and values. Last year we stopped advert from the so called spiritual healers and astrologers who were misleading and exploiting vulnerable people and sacrificed ÂŁ900 weekly revenue. Have we weakened our bottom line? No. Thanks to our dear readers, subscribers, supporters our advert revenue has gone up by 9% in the year ending March. Our paid subscribers have increased by 6% and the total number of subscribers is a little over 26,000 with another 5000 copy sales in news stands. I owe so much to so many who supported us in so many ways. I am delighted to commend this special issue to read, enjoy and perhaps embark on a further journey of progress and prosperity.

With Warm Regards CB Patel Publisher/Editor

Asian Voice & Gujarat Samachar


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Practical steps for setting up a trading portfolio. Investing in 2012 ow do I make my fortune and where is the free lunch? I often get asked if there is a ‘sure bet’, where an investor can be certain of high return without any capital risk. Just hearing this question disturbs me. It tells me that the person asking already has a misunderstanding of the fundamental principles in finance. The reality is that there is no free lunch in the financial markets and one must evaluate and take risks to make above average rewards. The secret relies in accurately assessing and being able to measure up each opportunity to match your criteria for your portfolio objectives. Here lies the second problem. Very few people have portfolio objectives. So where do you start? Part 1. Set up your ideal portfolio matrix. Where are you now? How well diversified are you? Take stock of your investment capital. Divide up all your assets into 6 categories, Cash, Property, Businesses, Stocks, Bonds, other collectables. Evaluate where you are now and set up your goals for Where do you want to be financially in 5 years time. Set up an online account with a broker or put together an excel spreadsheet and put in all your current investments and future planned investment. Becoming more active about your finances helps to motivate you to search out and find good opportunities. Do you make more than 30% ROI in your own business? Well then you should seriously consider if possible, investing more of your own capital into your business, since even Warren Buffet achieved a long run average return of around 30% annually over many years as one of the most successful living investors. The challenge here is that most successful businesses end up with cash piles that need to be invested. Part 2. Learn about the different asset types. Nobody can be an expert in everything, so pick your niche and if you don’t have one, be a generalist. There is strength in doing this. As an analogy, even if your not the chef in the kitchen, you should know the recipe for good results. Become good in one or two areas and delegate the other tasks to other professionals. Part 3 Become aware of market cycles. What are they and how do they affect me? Try to identify the bull and bear markets for 2012. What are the key drivers in


Rakesh Shah trades currencies commodities and equities at Kingly Capital the markets. Which ones are new and which are old? For example can we say the Euro crisis with Greece is over right now in May 2012? What will be the implications for Greek stocks and the Euro currency medium term. How can you take advantage of that without having a rollercoaster ride with every wave in the market up and down? Part 4. Learn to take the easier trades. The question is where do you find them and what do they look like? Too much detail to explain in a short article, but come along to some of the presentations I will be hosting during the year. Send me an email for details. info@kinglycapital.com Part 5. Improve your skill set in looking at investments. Everyone should know the basic tools for a business simple analysis of a business and then quickly progress to using some technical analysis to define trends and use charts Part 6. What are the practicalities of becoming a serious investor. This can mean anything from 4 hours a month for long term investing to some hours every week. The more time you have the greater the range of investments you should look at. Maybe you decide you do not have the time, as your business interests elsewhere or your job is too demanding. Even if you decide to delegate, make sure carefully understand the risks and realistic potential rewards around any investments you make. The internet, social groups, evening events and specialists financial services will always help in this regard. Part 7. So what are the key criteria for those that do very well. Getting someone to do your hard work and research helps and in this regard, finding and using a good broker. Quickly knowing the difference between and investing versus trading will help to define the amount of capital you risk. Understanding your pain threshold and cutting your losses quickly is paramount to success. Hard work always pays off and with that we come to an end. I wish you a happy time in your investing future. Rakesh Shah trades currencies commodities and equities at Kingly Capital. He is an advisor for High net worth investors and institutions at Sun Global Investments based at 106 New Bond St, Mayfair. Prior to this he worked at a number of investment banks in London and New York starting in 1995. He can be contacted on info@kinglycapital.com or at 020 7290 6930

Asian Voice & Gujarat Samachar


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Who Really Wins and Who Loses in Trading? hat if you had all the statistics as to who wins and who loses in trading? Which clients of a broker make money and which ones lose? What if that data could tell you across thousands of trades over years, what winning traders do right and losers get wrong, which products winners trade? At what times are they most profitable? Do they make more money betting prices will rise or fall? How much money do winners trade with? Is this different to the amount losers use? What techniques and strategies differentiate them? This has been an area of research for me ever since I wrote my first book 15 years ago, The Mind of a Trader. My interest has been re-ignited as I’ve just published my first book in seven years. It’s been a mission to democratise trading and investing. What annoys me since I started writing my Financial Times column back in 1999 is how much professional investors have access to, that the private investor does not. So like the ‘Occupy’ movement – I want to cause a revolution. I want the 99% to know what the 1% knows. I have access to the 1% so why shouldn’t I share it – for free. I’ve been disseminating this data and know-how freely on my free webinars on www.alpeshpatel.com – here are some of the findings: In FX trading, examining 12million trades, we saw that 71% of private investors had winning trades in AUD/NZD. They were least likely to have winning trades in AUD/JPY (in which 49% were losing trades). Of the popular EUR/USD – 59% were winning trades. In GBP/USD it was 64% that were winning trades. As for EUR/GBP – 59% were winning trades. But, before you get excited you should know that private investors on average lost money on all those currencies! How? Because although they had more winning trades in say GBP/USD (64% winning trades) they won on average 54 pips (points) and lost on the other trades in the currency on average 105 pips. So their average profit was about half their average loss across their trades. Overall 90% of traders lost money. In which currencies did they come closest to making money? AUD/JPY funnily – the one in which they actually placed more losing trades than winning trades? How does that make sense? It


Alpesh B Patel founding Principal Praefinium Partners (Private Equity) means they won more when they won, than they lost when they had losing trades. They let winners run and cut losers short. How did they do that? Well the more profitable trades and times to trade were in USD/JPY and GBP/USD between midnight and 6am New York time(!) when the US markets were quiet. At these times 55% of trades in these currencies were profitable. Presumably when the markets were quiet there was less volatility and accidentally being frightened or confused out of a trading position. Okay, so what other insights do we have? Crucial to letting winners run and cutting losers short was using ‘stop-losses’. These are orders when you place a trade to say at what price you will sell it. Research shows the traders who placed these at the time they placed their initial order were more likely to be profitable than those who did not. The ones who ‘traded by the seat of their pants’ without such ‘stop-orders’ tended to have a few big losses which would get the better of them. Another test showed that those we placed a reward target between 1 to 1.5 compared to their loss were the most likely to make money. So if you thought GBP/USD might go from 1.5 to 1.6 (your reward being 0.1) then your loss would not be under 1.4. What about account sizes? Maybe the profitable traders were just richer and had lots of money. Research showed that actually the traders with $10,000 in their accounts did better than those with $5,000. But note that it is a mere $10,000 not millions. And those with $1,000 did the worst. So when brokers try to entice you with small account opening sizes be warned – the reason you end up losing is because even a small bet will eat into a greater proportion of you initial capital and it is hard to recoup such percentage losses – and although you only lost 1/10 with a $1,000 account as you did with a $10,000 account – you are more likely to lose with that $1,000 account. Finally winners tended to use less leverage, or margin (if you’ve ever bought a house you know what I mean). Profitable traders used 5:1 leverage ie they borrowed £5 from the broker for every £1 they put up. Losing traders, especially more likely to have smaller accounts, used 25:1 leverage – maybe because they had so little capital – but they were also least profitable. The leverage did not improve their return on capital (as it does with houses if the prices go up) but made them losers. Just as it did with the credit crunch.

Asian Voice & Gujarat Samachar


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How Much Land Does a Man Need? he Bhagavat Gita proclaims, “Hell has three gates: lust, anger, and greed”. The renowned Russian author Leo Tolstoy once wrote a short story about a man called Pahom. Pahom was not a wealthy man, but like most men he was ambitious and desired to aquire a large area of land to cultivate so he could live a more comfortable life. However, no matter how much land he owned, it was never enough. One day Pahom was introduced to the Bashkirs, who owned vast areas of land. He tried to negotiate to buy some of their land. However, they in turn made a simple, but unusual offer. They said for the price of 1000 rubles, he could have as much land as he could walk around between sunrise and sunset. The only condition being that he must return to the starting point by sunset. Pahom couldn’t believe his luck and so the next day at sunrise he set off to mark his area of land. In no time he noticed the sun had begun to set. Realising that he was far away from the starting point he began to run back. He reached his starting point just as the sun had set. Delirious, he closed his eyes to picture his new land. He would never reopen them. His mind had pushed him so fast, and over such a distance, that he became oblivious to his body and he died from exhaustion. We are currently living in one of the most challenging economic climates in living history. The latest projections suggest that there will be no real signs of recovery for at least a few more years. Many people now need to make difficult decisions about their lifestyle. Some will no longer go on holiday abroad while others will turn down the thermostat on the heating at night. Even in our social interactions, whence people used to talk about buying a new car, they now discuss how to get more mileage from a tank of fuel. Eating out at a restaurant with friends was a regular weekly event, now it is a luxury reserved for special occasions. When I consider all of the things above, it actually reminds me of how my parents used to live. When they came to this country they did not go on holidays all over the world, they did not drive big cars which they would change every few years. They did not buy the best gadgets or have a TV in every room. That was the norm in those days. Their generation worked hard, saved religiously and only spent what they earned.


Amit Patel Personal Development and Human Resource Management How many people do that today? The fact is that as things become more expensive and income becomes that much harder to generate, we are all faced with the challenge of maintaining our financial security and safeguarding the things we value in our lives. And herein lays the one benefit to come from all this hardship. It is making us realise how much we’d like to have and how much we really need. There are three simple and fairly easy rules, which if followed sincerely, will ensure that we can remain financially secure, stress free and hopefully satisfied. 1. Do not spend more than you earn. While this seems obvious, the fact is that easy access to credit cards and 0% balance transfers have made people believe they have more money to spend than they actually have in their pockets. 2. Don’t try to keep up with the Jones’. An old but valuable lesson. Peer pressure from friends and family can be intense when they can still afford the finer things in life. One can sometimes feel that the same is expected of them. It isn’t and you need to be strong enough to resist it. Remember this Japanese proverb, “In wealth, many friends; in poverty, not even relatives.” 3. Heed the advice of Plutarch, the Ancient Greek author “Learn to be pleased with everything; with wealth, so far as it makes us beneficial to others; with poverty, for not having much to care for, and with obscurity, for being unenvied.” Tolstoy aptly named the story – ‘How much land does a man need?’

Asian Voice & Gujarat Samachar


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Managing your Banking and finance relationships in a challenging environment Rakesh Shah, Kingly Capital

hen one thinks of investments, it is very common to hear of the Asian community investing in a few common asset classes. One of the popular ones include buy to let property. Others include overseas currency deposits where investors look at the high interest rates offered by Emerging countries. Many banks offer higher rate investment product which focus on Emerging markets that have relatively stable currency rates. Foreign currency deposits have been popular in the past and they have a tendency to deliver above average returns over a number of years. The advantages are obvious, but there are 3 problems with this that are not so well highlighted when these products are sold. (i) When things go wrong, it gets very ugly very fast. And in the past history has shown us that this happens without much warning notice and the exchange rate will move quickly. (ii) Fixing this by hedging does not help much as this requires you to commit more capital, further reducing your return and your investment can easily turn into a loss. Unwinding it altogether will incur significant fees and sometime is not possible at all. (ii) Lastly, changes in interest rates have magnified effects on currencies. As we are in a very low interest rate environment, this means that any increases in interest rates result in big changes in repayments in percentage terms and absolute terms. The difference between a rise between 0.5% to 1 % and 5.5% to 6% may be the same in absolute numbers, but the effect this rise has in economic terms is very different. In oversimplified terms there is a multiplier effect that comes into play for economies with lower interest rates


with rate rises. With the interlinking of global economies, a slowdown in spending in low interest rate nations will directly affect higher interest paying nations as they are often the one supplying good and services to these countries. The net effect is that the currency rate will move. This point is also very important for the Buy to let market and financing rates in the economy. Buy to let from as viewed from an investment perspective, has a compelling argument for being a safe investment. The statistics have always described this as a fairly low risk secure investment as bricks and mortar are here to stay. Problems arise, such as those seen in the USA and now in the southern European states where net asset values have fallen below the purchase prices set over a wide range of years. This is well known by most buyers. The lesson to learn here is that we are in a very unusual situation where interest rates are technically at rock bottom levels but refinancing rates are still at almost pre crisis levels. What will happen to those rates when the base rate goes up by a few percentage points. The refinancing rates will rise in sync with this and this will make borrowing very expensive at current yield level for the average UK buy to let property. So what is the answer. Borrow as much as you can when you are able to, and keep some of the funds in reserve as a buffer, you may sacrifice a small amount in yield but the overall risk on your portfolio will be lower. The second point is that getting a mortgage will be much harder in the coming year as the Greece situation at the time of writing does not look like a happy ending, with a potentially disastrous default hanging on the precipice. This will result in the wholesale rise in funding costs for banks which will be passed on to the consumer. Regulators are further pushing banks to hold additional capital against higher risk mortgages. Are the banks doing well out of this, the net effect is that they are under pressure to perform and to make back profits on bad loan books, so competitive pressures offer little relief to the situation and rates look set to rise slowly but significantly over the next 12 months, even if base rates stay the same. Lastly, where does one look for some respite in this market? When looking at the credit rating of your bank, investing in bonds in corporations with a higher (better) credit rating can often give you a better yield. Obviously you lose the depositor protection that is offered by the government for private investors, but this needs to be carefully judged against the opportunity and the relative risk each investment offers.

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Bonds with above average yields Ben Kumar onds and Equities tend to be talked about in a binary manner by the investment world, with one acting as yin to the other’s yang. Newcomers to finance are taught that “When equities go up, bonds go down.” This is then expanded; you invest in the volatile equity markets when you want to take risk, and you favour the guaranteed income stream of the bond markets when you want protect your capital and lie low. In a very broad historical sense the above theory holds true – however in today’s world, this oversimplification may not be entirely helpful. When most people talk about bonds, they mean government issued debt – particularly that of large developed nations such as the USA, Germany, Japan and the UK. Yet in 2010 the global bond market was worth $95 trillion, of which only 43% was government issued debt. Clearly there are other entities looking to the public market for financing, and it is these corporate bonds which I will be discussing. Corporations have been issuing bonds since the 1860’s when railroad and mining companies looked to finance expansion across the USA, and the underlying principles remain the same today – by going directly to the public, companies are often able to access funding at a cheaper rate, and for longer periods, than would be offered by a bank. In Hamlet, Polonius said “Neither borrower or a lender be, for a loan oft loses both itself and friend”, but as it seems unlikely that Shakespeare was much concerned with modern portfolio theory, we can probably safely disregard that particular snippet. In fact buying corporate bonds can be a very attractive prospect for investors; unlike having ownership of a company through purchase of its shares, buying bonds issued by corporations allows us to wield our cash as lenders. Corporate bonds do not behave in the same way as government bonds. In the low interest rate environment we are in currently, government bond yields are at record lows, whilst corporate debt offers considerable opportunity. Yields on the UK 10 year GILTS recently hit a 303 year record of 1.88%. However, UK investment grade corporate bonds have an average yield of 4.42%, more than double. In the USA the situation is similar, 10 year Treasuries yield around 1.8%, investment grade corporate have yields of around 3.9%, and the riskier high yield sector has a yield of more


than 7%. As with any financial instrument, there are associated risks; with lending you may not get your money back, and interest payments might not be made. However, in the event of a company going bust, being a bondholder puts you near the front of the queue when it comes to the company meeting its obligations. It’s rather like being first in the queue for the lifeboat on a sinking ship – you’re still not in a great position, but it’s better than being at the back Understandably, markets view companies as inherently more risky than (developed) nation states when it comes to meeting their debt obligations – even a massive, long established company like Exxon Mobil can be seen as having potential to lose customers and go bankrupt. In order to compensate for this risk, corporate bonds tend to have higher yields than the government debt. This is where the ratings agencies come in (although their reputation has been somewhat battered of late); Moody’s, Fitch, Standard & Poors are all supposed to provide an independent assessment of how likely a company is to pay its creditors – including you, the corporate bond holder. Broadly, companies fall into two categories – investment grade and high yield, the former being considered safer than the latter. As with equities, selecting a particular corporate bond is difficult without devoting considerable time to researching the company and its financial position. In addition, should you wish to purchase a corporate bond, the minimum order tends to be prohibitively large (with a few recent exceptions). As such, exposure to corporate debt is probably best when obtained through a fund, index-tracking or otherwise, that owns a range of bonds from a number of different organisations, selected with diligence and expertise by professionals.

Asian Voice & Gujarat Samachar


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Stock Exchanges: Where To Now For The Exchanges Sector? umper profits. No one can say they would not like to share in such spoils in these times of uncertainty, with the Euro zone appearing to be pulling itself apart over Greek woes and the U.S. economy posting a huge current account balance (read deficit) of -US$473.4bn (a minus!) for the latest 12 months. Whilst it might appear counter intuitive, the exchange sector could provide that relative safe haven over the medium to long term. That said, one cannot ignore the fact that 2011 saw quoted stock exchanges in Europe, North America, Latin America and in Asia Pacific perform dismally in terms of share price action. Interestingly heightened volatility on the markets due to economic uncertainty has played to some exchanges. According to the FTSE Mondo Visione (‘FTSE MV’) index, a specifically constructed index tracking share price movements of listed exchanges globally, a slight recovery in the sector has been seen in Q1 2012 to the end of April, with a +8.5% increase in US dollar terms. Some observers might have thought the sector was oversold and a correction due. It’s still a mixed picture. Currently, the FTSE MV index is composed of 23 constituents and spans exchanges like the Australian Stock Exchange (ASX), Johannesburg SE, London Stock Exchange Group (LSEG) and the Warsaw Stock



Asian Voice & Gujarat Samachar

Roger Aitken Exchange. In addition to ASX, there are six other quoted exchanges across the Asia-Pacific region in the analysis: Bursa Malaysia, Dubai Financial Market, HK Exchanges & Clearing, the Multi Commodity Exchange of India, NZX and the Singapore Exchange. In the normally frenetic world of daily equity and derivatives trading, when it comes to takeovers and M&A moves the sector has recently been beset by problems in pulling off deals. To some extent the landscape has been bogged down by concerns from the regulators over market share concentration in certain securities trading segments. This was so with recently aborted merger between Deutsche Boerse (Frankfurt) and the NYSE Euronext, which fell foul of EU regulators in Brussels. Elsewhere, a tie-up between the London Stock Exchange Group (LSEG) and Toronto Montreal Exchange (TMX) ran into opposition from Canadian investors (under the Maple Consortium), wishing keep TMX in Canadian hands. And, while incumbent exchanges in Europe Deutsche Boerse, LSEG and NYSE Euronext (incl. Paris, Amsterdam, Brussels and Lisbon) - have faced growing competition in recent years from new exchange entrants - Multi-Lateral Trading Facilities (‘MTFs’), the incumbents have successfully mounted a rear guard action. Many MTFs have either closed down, just about broken even in a few cases or been acquired. An example of the latter is BATS Trading’s takeover of Chi-X. Other leading incumbents like the LSEG are operating now with a foot in both camps, having acquired Turquoise, an MTF and hitherto a rival. So, now they offer equities and derivatives trading on three markets: London, Milan (through Borsa Italiana) and Turquoise. For overall FTSE 100 trading volume, Turquoise accounts for c.10% of the market while LSEG has around 60%. These different segments cater for different end clients and types investor activity - on platforms developed by Millennium IT, a Sri Lankan software firm based in Colombo, an LSEG owned firm. One of the key aspects behind LSEG’s recent success is that cutting-edge IT through Millennium IT software and new platform upgrades has driven equity and derivatives volumes to new levels. The technological improvement has been profound in terms of trading speeds (aka ‘latency’)

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each this May. Over a 5-year period to date the exchange’s share price has declined 27%, although this a mild deterioration compared to many other FTSE 100 shares. Nevertheless, it’s very a case of buyer beware and selecting options. Given than the exchange business is a volume game and about scale in a global context, more mergers cannot be discounted. But the $64m question remains who is next in line and how such deals are to be executed. About the author: Roger Aitken, is a freelance journalist and a former FT staffer who writes on exchanges and trading technology. He is also an Associate Analyst for benchmarking firm BISS Research (www.bissresearch.com). This is touted on LSEG’s new platform to be ten times (10x) faster and ten times cheaper. It’s also been a story in delivering growth and a diversification strategy, with what is described as “scale, scope and reach of Group transformed through organic growth and acquisitions.” Migration to the Millennium Exchange (i.e. new LSEG platform) towards the end of Q1 2011 saw latency fall from 1.4 to 1.7 milliseconds to below 0.2 milliseconds. Just months later (19 August 2011) volume on the system hit a record 109,537,950 orders - up from an average of 40m-50m daily trades for most of H1 2011. Perhaps unsurprisingly total income across the whole LSEG business in the 12 months to the end of March 2012 came in at £814.8m (+21% over a year before). Much of this has been fuelled by high frequency trading and algorithmic activity, which is accounting for an ever growing per centage of all trading. This is similar picture to that on NYSE Euronext with its Universal Trading Platform and on Deutsche Boerse, Eurex - as well on North America exchanges. The exchanges sector might not have recovered to the heady levels seen on 24 December 2007, when LSE shares were trading at £19.56 a pop - compared to around £10



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The good, the bad and the ugly of the UK high street he UK high street, the quintessential symbol of UK property, is caught up in a whirlwind of forces. This article summarises the key issues and strategies facing Landlords. The Prideview Group are renowned commercial property consultants, and it’s critical that anyone affected by, or interested in capitalising on, today’s unique market conditions, should contact us. The main adverse forces shaping our high streets include online commerce, out-of-town retail parks, the shortage of bank lending and the prolonged consumer squeeze. Conversely, several elements still weigh in its favour, such as soaring fuel prices, the rise of independents and the convenience factor.


The Good Many service and leisure businesses are unaffected by online competition, of which those that don’t rely on discretionary spending are prospering, such as fast-food restaurants, JD Wetherspoon-type pubs, mechanics, hair salons, pharmacies, funeral parlours and dentists. With the consumer squeeze being as tight as ever, it’s hard not to notice the proliferation of pawnbrokers and pound shops such as 99p Stores, as well as charity shops (who pay no business rates). Other ‘pro-recession’ businesses include betting shops and adult gaming centres, perhaps due to their low-stake but high-reward, aspirational nature. But the essence of any high street is its large, residential catchment, which is set to increase following recent legislation facilitating the creation of flats above commercial units. The convenience factor has never been so important with fuel prices rocketing and a population working harder than ever, so it’s no surprise that Tesco’s & Sainsbury’s have recently announced they will be focusing investment on their convenience stores. Properties let to any of the above tenants and in prime locations command top values – the time may be right to sell and we have buyers. But interestingly, we are seeing excellent yields on properties in secondary locations let to independent tenants in comparable businesses. The independent tenant is proving resilient - they are extremely committed to the units they occupy, and have a greater affinity to the local population, but investment in these properties should only be done with expert advice. The Bad It’s estimated that up to 40% of high street tenants are stressed, so Landlords need to pay closer attention. With online commerce forecast to comprise 14% of retail

Nilesh Raj Patel Consultant at The Prideview Group spend by 2015, many retailers, and in particular film, music and gaming shops are under pressure, as seen by the recent administration of Game. With half of all high street tenancies expiring in the next four years, and many multiples like The Arcadia Group committed to reducing their store portfolios, Landlords should seek advice or pay the price. Any tenant looking to vacate faces dilapidations and possibly relocation costs, and most individual Landlords don’t realise this. We serve the right notices at the right times, bringing tenants back to the negotiating table. In such negotiations, Landlords need to make concessions. The easiest way is by reducing tenants’ insurance premiums, something our management arm Pride Management has done for hundreds of properties this year via Bircroft Insurance Services, one of London’s larger brokers. Other options include offering rent-free periods, shorter leases, monthly payment plans or even reduced rent. Each property differs, as does each tenant, and what works for one doesn’t necessarily work for another. The Ugly Finally, with vacancy rates already averaging 14%, we represent numerous Landlords with vacant properties. It’s essential to act quickly, and market your property aggressively and locally, noting that independents opened 3 times as many stores as multiples in 2011. Again, the right incentives need to be offered, and a change of use may be required to attract good tenants. Meanwhile you will be liable for the building insurance, business rates and bank interest - we can arrange minimal premiums (note that vacant building’s insurance cover is restricted and subject to adequate security measures and regular inspections) and can assist with rates relief applications and bank negotiations. In conclusion, it’s important to reiterate that the high street is not dying – it’s being reborn. Consequently the nature of property investment and management is changing, and Landlords need to keep up. Every property location is different, as are the financial circumstances of both tenants and Landlords, and accordingly only a tailor-made solution will ensure you find the optimal strategy for your investment. To learn more about The Prideview Group and view their current opportunities, visit www.prideviewproperties.co.uk or call 020 8863 8680 to arrange a free consultation.

Asian Voice & Gujarat Samachar


20-21-Paresh-FX_A4 Temp 21/05/2012 11:38 Page 20

How the Euro has affected the Global market and trade When Greece leaves the EURO, what happens next? he questioning, fears and speculations as to whether Greece will leave the Eurozone are spreading widely, influencing world markets and weakening the Euro. For instance, this week the US Dollar has gained further ground and the Great British Pound has rallied to 1.26’s against the Euro, enabling investors outside the European Union to take advantage of rates such as British Pound against Euro and US Dollar against Euro, which have been traded at record highs. The US Dollar itself has the potential to get stronger due to the Eurozone crisis as the concerns over the Greek exit sapped investor demand for higher yielding assets. As evidence of this, RationalFX, foreign exchange and money transfer specialists, have seen an increase in the number of Euro buyers and the volume that they are buying. Even people looking to sell are committing now, as they fear the Euro will weaken further. The amount of traffic that they have received across their



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Paresh Davdra Dealing Director at RationalFX multilingual websites has come significantly from European countries such as France, Spain and Italy. Speaking in numbers, the growth of other trades in British Pound against the Euro for example was about 70% last month. Due to the announced Greek elections in June and the probability of choosing an anti-bailout government, together with news about panicked Greeks pulling out their Euros from banks, RationalFX expects the Euro trades to continue to grow. The situation with Greece is not bright, as the world is well aware. Even if Athens negotiated debt write-off, the ´health´ of its economy would not been helped. To get back the lost competiveness Greece obviously has to follow only two painful paths: either to keep the Euro and lower salaries, benefits and prices in the country significantly, or to leave the Eurozone and return to the Drachma. In terms of the immediate exit of Greece, the implications would be extremely detrimental for businesses, however the severity of the situation is hard to grasp at this point. If Greece reverts to the Drachma, banks across the world would have to react instantly in order to satisfy payment in and out of Greece. International traders in Greece would see the costs of goods and services rise dramatically, causing extreme fluctuations in profit and loss. For traders outside of Greece the cost implications may be of benefit as the Drachma would be weaker than the Euro by a wide margin, however, the confidence in the country could deter importers from Greece to source elsewhere or even use an alternative stable currency. The potential reintroduction of the Drachma would likely be regulated by Greek authorities. Among the main questions will be the confidence in the Drachma. It could

20-21-Paresh-FX_A4 Temp 21/05/2012 09:53 Page 21

well be that even local businesses continue pricing themselves in Euros or even US Dollars, as the Drachma is poised to continuous devaluation. Regarding the ripple effects on world market the exist of Greece could well encourage other peripheries to follow suit and opt out of the Euro. It will certainly give ammunition to weaker European economies to soften austerity cuts, which will make it extremely hard for the ECB and the IMF to continue funding banks and ultimately governments. The cost of borrowing could sky rocket for weak economies causing another credit crisis and a possible drought of funding. The possibility of a Greek exit from the Eurozone is implicating questions about the monetary system itself; it is apparent that the ´problematic´ states threw it at a crossroads and that it is ´tearing itself apart, without any obvious solution´. Although a Greek exit would not mean an immediate end of the Euro and could even trigger a stronger and more stable Euro, it could at the same time become a point when an avalanche is set off. If Spain and Italy followed, it could have a similar impact to Lehman Brothers´ 2008 collapse. Concerns in Spain are nowadays on domestic toxic mortgage securities and if the Eurozone starts to break up, the property market is likely to feel the impact causing less people to invest in Spanish property thus further bleeding of local banks. As Italy is the third largest debt market in the world, an

exit of the country could be catastrophic and the amount of debt held by the sovereign could escalate to paralysis. Italy will have to consider hard if it chooses to exit the Euro, more so than any other nation in the Eurozone. There is no easy solution or certainty in the Eurozone being saved and European governments will have to act more decisively in order to save the Euro. The monetary system of the old continent needs more than ‘avoiding recession for the first three months in 2012’ to increase any real consumer or investor confidence in the troubled economy.

! 0% commission & no hidden costs ! Fixed exchange rates for up to 2 years ! Low wire transfer fees ! Stop/limit orders & forward trades ! Online payments platform available 24/7 ! Personalised service Sign up for a free account today: www.rationalfx.com or call our dealing desk: 020 7220 8181 Asian Voice & Gujarat Samachar


22-23-Dina Bhudia x2_A4 Temp 21/05/2012 09:53 Page 22

The P2M Group Believe the Future is Green “Ten years later, our passion for excellence is unwavering and is evident in everything we do” 10 years of excellence “To celebrate ten years in business is an important milestone for our company and we are very proud to have reached this pinnacle. It’s a mark of our sustainability as a company and a testament to the outstanding work of our people and our highly ethical approach and strong client relationships.” The Journey: Parent - Child Since starting out as a small Financial Services company in 2002, P2M Asset Management has grown in size, in addition to the financial services aspect of the business the group now has under its umbrella, P2M Properties, a property arm specialising in both residential and commercial sales, lettings and investments as well as solid foundations within the international property arena. ‘A friend of mine once said always be a Parent in every situation’ As a parent it is all about investing in our child’s future at conception, and providing strong foundations – these principles are no different in looking at Investment opportunities ... it is always recommended to invest at early stages, and diversify as the years go on just as we would evolve as a parent... from deposit accounts to GILTs, PEPs to ISA’s to currency trading, from residential property to commercial portfolios. It’s all about change and adapting to the climate and economy around us, however you must not forget... You must always remain the Parent in the parent child relationship...otherwise you will see the signs of negative assets. Where we are today The brand is growing, the P2M Group with Dina Bhudia being the pillar of the organisation, with Service Quality and a Family office Concept. The company is proud to be affiliated with Top Legal 500 Solicitor firms and working closely with All Banks and Investment Insurance companies. Meeting only, yes only the client’s requirements. Incorporating Specialist Inheritance Tax and Estate Planning, as Client Assets Increase and making sure the company is thinking ahead and creating new investment opportunities for our Clients and Business Alliances.


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Dina Bhudia CEO P2M Asset Management Ltd

Traditional v New & Innovative We are always on the lookout for new opportunities. Stock market, Property, precious metals, Traditionally Tax free ISA’s and Investment Bonds have had a fabulous run over the past decade or so, the future however, in our opinion, looks bright, tinged with plenty of green. We believe green ethical opportunities are the future for many years to come, and in our opinion, now is a strategically prudent time to get involved. Our collaboration and agreement to become an authorised partner of the London Credit Exchange to introduce their products and services via P2M to our extensive client base has been carefully considered. Their slogan “Where profits and ethics unite” we believe, sums up both ours and their company ethos. London Credit Exchange Ltd is a leading analysis and research company supplying our clients with up to date information in the green energy markets sector. Carbon Trading, established in the wake of the Kyoto Protocol, is a fast maturing market and one that is forecast to be one of the most actively traded commodities worldwide. FAQs What is carbon dioxide and why is it harmful? Carbon dioxide is a naturally occurring compound (one carbon, and 2 oxygen molecules) and is a greenhouse gas. The burning of fossil fuels (coal, natural gas, oil etc.) for the production of power emits greenhouse gases into the atmosphere. These gases increase the atmosphere’s ability to absorb infrared energy and therefore affect the climate dangerously. What is a carbon credit? A carbon credit is a term for any tradable certificate or permit entitling the right to emit one metric tonne of carbon dioxide (CO2). It represents that a saving of one metric tonne of CO2 has taken place, and are traded between those who have reduced CO2 emissions and those who need to offset CO2 emissions. Further, they are also used for speculation by private and institutional clients. Why do we have Carbon credits? Carbon credits were created as part of a collective international approach in controlling the emission of carbon dioxide and other greenhouse gases into the atmosphere.

22-23-Dina Bhudia x2_A4 Temp 21/05/2012 09:54 Page 23

As part of the Kyoto Protocol, industrialized countries were given allowances for the amount of CO2 they are allowed to emit. Companies who exceed their quotas can buy carbon credits to offset the difference from those who do not require their full allowance. What is the minimum I need to Invest? Minimum investment of £3,000 required. Short to medium-term investment with potential returns predicted in 12 to 18 months. Where do carbon credits come from? As explained above, a carbon credit represents that a saving of one metric tonne of CO2 has taken place somewhere in the environment. They are also used to fund future projects. These projects include: l Solar, wind power, and hydroelectric dams l Destruction of industrial pollutants l Land use, land use change, and forestry l Destruction of landfill methane l Energy efficiency Who purchases Carbon Credits? Governments, companies, and other organisations buy carbon credits in order to comply with emission regulations. In a secondary market, individuals, companies, and governments purchase carbon credits in order to offset their carbon footprint. Where do VER Carbon credits trade? VERs trade on the over the counter (OTC) market and on exchanges such as the London Credit Exchange Why purchase carbon credits? Carbon credits can provide diversification in your investment portfolio from other asset classes, such as equities, bonds, unit trusts/mutual funds, currency and property. The carbon market is still relatively young compared to other financial and energy markets. Therefore participation at an early stage could prove profitable, it provides a good entry level for investors to benefit as prices appreciate. The carbon market is seen by many analysts as having the potential to become the largest commodity market in the world. Carbon emission output will continue to get stricter, and as energy output increases for countries and organizations, demand for carbon credits will rise, therefore pushing up the price. Purchasing carbon credits allows you to offset your carbon footprint, ensuring you are doing your part in the battle to fight climate change. Is there a market? Since the introduction of carbon credit trading, the Carbon Market has grown massively. Bloomberg, the financial channel, stated that the global Carbon Market was worth a staggering $243 billion in 2010 and grew by 30% in that year alone Credits are awarded to countries or groups that

have reduced their green house gases below their emission quota. Carbon credits can be traded in the international market at their current market price. For example, if an environmentalist group plants enough trees to reduce emissions by one ton, the group will be awarded a credit. If a steel producer has an emissions quota of 10 tons, but is expecting to produce 11 tons, it could purchase this carbon credit from the environmental group. The carbon credit system looks to reduce emissions by having countries honor their emission quotas and offer incentives for being below them. CARBON CREDITS India and China are likely to emerge as the biggest sellers and Europe is going to be the biggest buyers of carbon credits. Last year global carbon credit trading was estimated at $5 billion, with India’s contribution at around $1 billion. India is one of the countries that have ‘credits’ for emitting less carbon. India and China have surplus credit to offer to countries that have a deficit. India has generated some 30 million carbon credits and has roughly another 140 million to push into the world market. Waste disposal units, plantation companies, chemical plants and municipal corporations can sell the carbon credits and make money. To find out more about this exciting emerging market, contact P2M today, we believe the future is very green and very ethical.


“Where profits and ethics unite” To receive an invite to our forthcoming seminar at The Grove, Watford, please register your interest by email to dina@p2m-group.com Collaboration between P2M Asset Management Ltd & the London Credit Exchange

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24-Paresh Kiri_A4 Temp 21/05/2012 09:54 Page 24

Creating True Alpha “Never have so few been afforded the opportunity to make a living by sitting at home” o how is it that so many fail to make the grade and end up making excuses “it was different in them days” or “he had support from his family, boss or rich friend” With so many platforms making pitches for your business in the arena of on-line trading, we the consumer have now a unique opportunity to create real Alpha. This is the only jargon you will ever really need to know – in the realms of hi finance it means simply “that return that defines the result from active management of a portfolio” Of course this implies that if the market or index is down by 10% and through the skill of the manager the portfolio is only down 5%, he is not help to task. This is still a loss after all. This is fine if you give your money to someone else to manage, but more and more of us are becoming astute traders. We do not use the word invest here, simply because the capital gain you achieve through your trading should go towards a balanced portfolio, which consists of all your investments.


Paresh kiri cies that effect the markets and the more detailed strategies that have helped many traders find a footing to greater success. Ultimately it is down to us as individuals, to find the strategy that best suits our personality. The UK has a unique offering like no other, in that spread trading is allowed and using simple techniques we can create True Alpha, i.e. that which not ONLY beats the market, (as I have heard of traders who specialise in FX, and are down on the month but then compare themselves to the FTSE index, which has absolutely no bearing on the strategy employed), but is positive week in week out. I say weekly as you will have down days!!, and it is essential the home based trader works that much extra to ensure the week is positive. Imagine if I have only positive weeks then I will have only positive months and years. This is the simple desire of ALL professional traders. How do they achieve this? Winning weekly Spread trading in the UK is a tax free instrument, if used as a trading tool to create capital gains; we can begin utilising all the aspects of investing. Capital gain MUST and CAN only come from developing your skill as a true alpha trader. So no more accepting a loss! The rules are simple and it only requires application. I could here tell you several strategies that have worked for professionals, but without application of the risk management rules they are all non-runners.

The Rules:

In reality if we wish to trade the markets, then we now have all the tools available to do just that, through the likes of London Capital Group and ETX Capital. The skill for us that trade form home is not be content with just beating the market. We have bills and a standard of living that we would hope to advance, not degrade, and so we, the home based trader must treat this with the seriousness and urgency that befits starting your own business. Half baked attempts will lead to those nostalgic clichés mentioned in the opening paragraph. Being focused requires some training, and changing of those conditionings begins by listening to many reputable free resources, like www.alpeshpatel.com who runs regular webinars to explain the more macro poli-


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As we are looking at capital gains, we will assume we are only going to use risk capital. Assuming our risk capital is £5,000, and then we abide by the following habit: 1. Get up early enough to read online what has moved your preferred market overnight 2. In the UK/Europe macro-economic figures come out between 09:30 GMT and 11:00am GMT, in the USA any time after 13:30 GMT, - be prepared 3. Do not risk more than £50 pounds a day, on such a small sum, i.e. 1% 4. Aim to make £70 pounds a day, hence your risk/reward is just over 1:1. If you make £50 in the day then never lose the whole amount, go home at the end of the day with say £25. 5. Be prepared to trade everyday. These rules will instil the right habit and attitude to facilitating a more profitable trading experience.

25-Vedanta hedging-1/2_A4 Temp 21/05/2012 09:57 Page 25

How Hedging protects your business edging is a way of protecting your businesses against adverse interest rates and currency movements. Without it you can be a significant disadvantage to your competitors and may be risking a great deal more. Even very large businesses often don’t have the expertise to be able to understand the underlying mechanics and pricing of these opaque products. A business may think that it is getting ‘advice’ from the bank, in fact, the bank is merely providing selected information to encourage a particular hedging product choice. Banks often stipulate that they don’t provide ‘advice’, meaning that businesses should seek pure independent advice from an FSA Authorised firm who can advise on these hedging products. Even if a business doesn’t want advice, our knowledge of these products and ability to price them in realtime, means we or you can effectively negotiate with the bank, reducing the cost of the hedging. Often, the hedging may not have an upfront cost attached to it, but rest-assured, it could prove very expensive - the Bank will be making a large profit out of you! Recently we saved a Nursing Home over 400% on their hedging costs, for a seven-year loan with their Bank. There is a lot of confusion and misleading information regarding this issue in the media. Each case is different and needs suitably qualified expertise. Any


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Abhishek Sachdev business that feels they may have been potentially missold should speak to a fully FSA Authorised firm to discuss about the strengths of any potential challenge they may have. We advise Politicians, Journalists, Solicitors, Barristers and even the FSA about this issue. Firms should be cautious speaking to Claims Management Firms that do not understand the complexities of these individual cases, and Solicitors who claim to understand this area but only have a shallow understanding. We believe in acting in the client’s best interests and making the complex intelligible. We have successfully helped dozens of business with their Hedging. To discuss any aspect of your Interest Rate or Foreign Exchange Hedging, please get in contact with us at Vedantahedging.com or 0207 183 2277

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26-Bhavini Kalaria_A4 Temp 21/05/2012 11:39 Page 26

Parent Company Liability For Health & Safety Matters Of a Subsidiary Company here has been a big shake up in the corporate world recently. Businesses need to know what risks they face to be able to plan properly. What a company might be legally responsible for is a risk which, if ignored, can be very costly. So, it is not surprising therefore that companies which are arranged in a group (with one company controlling others underneath it) have often taken heart from the traditional view that a parent company cannot be held to account for failures of a subsidiary company: liability defined and delineated in this way meant that each company was seen separately and if things went wrong responsibility lay where it fell. Not so anymore. Only a few weeks ago, the Courts found that a parent company should pay damages to a worker in its subsidiary company for his asbestos related health problems where the subsidiary had not put in place measures to protect workers from exposure to asbestos. This has ramifications for large multinational corporations of course. But if you are a UK company and have subsidiaries in India, it is equally important. You can see why: if we take the example of Union Carbide Corporation (and assume that it was a UK company) workers in its Indian subsidiary may have received compensation which better reflected the actual loss which was caused by the explosion in their factory in Bhopal, with this judgment. Now, not only will parent companies have to think about the reputational risk, but as a business it is vital


Bhavini Kalaria The London Law Practice to ensure that you know the potential costs of a claim of this kind (which can be brought long after the actual work practice has stopped because some illnesses may not manifest themselves until much later). So what happened here and importantly how can businesses plan for this potential new legal risk? In short, in this case, by being in control of health and safety policies across the group (the companies shared the same health officers for example) the parent company was also accountable for any deficiencies. Basically the parent company knew of a danger and had taken it upon itself to direct how the health effects from asbestos could be managed but didn’t communicate this to the subsidiary company – that, despite knowing more about the harm posed to people. Taking direction from the judgment either each company needs to be selfstanding and self-regulating by making sure their workers are properly protected; or where a parent company is indeed responsible for and aware of such health and safety issues, then knowledge needs to be dispersed amongst all of its subsidiary companies promptly by the parent company, which otherwise leaves itself open to court action. As we get used to this small but important shift, aside from the legal consequences businesses may also be pushed to answer the ethical issues which arise from this judgment and corporate social responsibility takes on a fuller, new meaning. Coming back to the example of Union Carbide Corporation – a judgment of this kind against it would have undoubtedly had an effect on its public image (and consequently decisions like whether something as big as the Olympics can or should be linked to it). As to whether directors in a parent company may wish to consider obtaining cover for themselves and the parent company for claims of this nature, this is a question which will need to be answered depending on specific facts. Of course where such insurance exists, the Courts could find that the existence of such insurance indicates that responsibility has been assumed by the parent company. If you have any questions about this or any other company related issue, please don’t hesitate to contact Bhavini Kalaria at The London Law Practice on 020 8445 6753.


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28-30-Kiran Patel x2_A4 Temp 21/05/2012 09:58 Page 28

Is it really a Budget for growth? hen the Chancellor of the Exchequer, George Osborne stood up and announced his Budget on 21 March 2012, there were a number of substantial headline grabbing measures that were introduced, some of which was already leaked and others were news to all. However, despite all the publicity (and excitement, if one can refer to it as that), the overall impact on the deficit, or growth, for that matter, will be relatively insignificant, in my opinion. This is due to the fact that the Chancellor has balanced any tax cuts with tax rises and cuts to certain benefits. Generally, all tax payers have come out as winners, with something of a lifeline by the announcement to raise the tax free personal allowance by more than £1,000 as part of the wider plan to increase the threshold to over £10,000 by 2015. Although this is likely to


increase the amount of take home pay for the basic rate tax payers, this has been counteracted by the higher rate threshold being reduced by £1,025 to £41,450. In addition to the above, those earning over £150,000 per annum are likely to breathe a small sigh of relief as the top rate of tax of 50% is to be reduced to 45% from next April. George Osborne indicated that the top rate of tax of 50% is both damaging to our economy and raises next to nothing in revenue. Although the rate of tax is reduced from 50% to 45%, in my opinion, this is still likely to raise next to nothing in revenue for the Government and may still be considered as a deterrent for inward investment in the UK. With regards to business taxation, the rate of Corporation Tax is set to be cut further from 24% to 22% by 2014 and in the opinion of the Chancellor, the reduction in Corporation Tax rate is likely to attract more businesses to set up in the United Kingdom.


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Kiran D. Patel, FCA is a partner at Weston Kay Chartered Accountantss Accordingly, the UK will have the lowest rate of tax in the G7 and the fourth lowest rate of tax in the G20, ahead of Turkey, Saudi Arabia and Russia. Unfortunately, banks will not benefit from the reduction in the Corporation Tax rate as the full rate of bank levy will increase from 0.088% to 0.105% from January 2013. In an attempt to improve the administration of the tax system for small businesses, a voluntary cash basis for calculating tax for unincorporated businesses with a turnover of up to £77,000 will be introduced from April 2013, subject to consultation. There will also be consultation on the simplification of the expenses system for the business use of motor vehicles, motor cycles and homes and proposals have been announced to introduce a disincorporation relief for entities trading as limited companies. To further assist small businesses, the Government has pledged £20bn worth of guarantees to banks to encourage them to offer cheaper loans to small and medium sized enterprises. A number of banks have signed up for the National Loan Guarantee Scheme which will allow them to lend to businesses at a rate that is 1% cheaper than they would normally. Although there will be a number of conditions attached to the eligibility to obtain cheaper loans, the general criteGeorge ria is that a small and medium sized business Osborne with an annual turnover of up to £50m will be able to apply for the cheaper loans. In order to stimulate foreign investment into the United Kingdom, and as was previously announced, from 6 April 2012 there will be changes to the taxation of non-domiciled individuals to: l Allow them to bring their overseas income and gains to the United Kingdom tax free to make commercial investments in qualifying businesses; l Increase the existing £30,000 annual charge to £50,000 for those resident in the United Kingdom in 12 or more of the last 14 years; and l Reduce the complexity of some aspects of the remittance basis rules. This is likely to attract a substantial amount of inward investment from overseas for non-domiciled individuals. On the individual front, there is a little piece of good news in relation to child benefit cuts, previously the Government had planned to remove child benefits

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28-30-Kiran Patel x2_A4 Temp 21/05/2012 09:59 Page 30

from any household with a higher rate tax payer residing therein. This was generally claimed to be unfair on households with just one earner who is a higher rate tax payer, as they would lose their child benefit, whilst a family with two earners just under the higher rate limit would keep it. As a compromise, George Osborne has announced that only households with someone earning over £60,000 a year will lose the child benefit completely, while those with an income of between £50,000 - £60,000 will see the child benefit being withdrawn gradually, a 1% reduction to every £100 earned over the £50,000. According to Government figures, this revision means that 90% of all families will remain eligible for child benefit payments. Those in Armed Forces and their families are set to benefit from a reduced cost of fighting in Afghanistan. The cost of operations, funded by the Government’s Special Reserve and separate to the Defence Budget, is estimated to be approximately £2.4bn lower than planned. The savings will be spent on £100m of improvements in the accommodation for Armed Forces and their families. The families will also receive double the welfare grant that they receive when someone is deployed and the benefit from a doubling of the Council Tax relief currently available. The above highlights some of the positive aspects of the Budget that is likely to stimulate some form of growth and enthusiasm within the economy. In the future, however, as with all Budgets, the money has to come from somewhere and with limited manoeuvrability, there were a number of points outlined in the Budget that will cost the people of the nation in some form or another. The Chancellor did not cancel the 3p fuel duty hike planned for August which will seriously damage the already battling record high pump prices. The increase which has already been postponed since November, is likely to add £46 to the average annual fuel bill for one car, according to the AA. This will reduce the savings made from the personal tax allowance increase straightaway by approximately 21%. In addition, motorists will also have to incur additional costs for the toll charges being introduced as a result of the privatisation of a number of roads in the future. There have been substantial changes to the basis on which gamblers will be taxed and the Government is outlining plans to tax online gambling based on the location of the gambler, not the location of the company as it does now. This change will close a loophole that enabled overseas operators to largely avoid paying


Asian Voice & Gujarat Samachar

the tax in the UK and may convince those operators who have moved offshore to avoid the tax, to return to the UK. The stamp duty land tax holiday that was previously announced will not be extended beyond the 24 March 2012 deadline. This will result in first time buyers purchasing a property worth up to £250,000 having to find an additional 1% for the stamp duty land tax on the transaction. With regards to stamp duty land tax, in addition to the above, the Chancellor has announced a new 7% rate of tax on sales of properties with a price of £2m or more with effect from midnight on 21 March 2012. Moreover, the Chancellor has also vowed to clamp down on stamp duty avoidance and introduced a 15% stamp duty tax on residential properties worth over £2m bought by companies. Smokers and drinkers were also amongst those who are hard hit by this year’s Budget. The Chancellor announced that the stamp duty on tobacco products will rise by 5% above inflation, resulting in the cost of a packet of cigarettes increasing by 37p. Finally, pensioners were surprisingly hard hit with a sneaky tax hike in the Budget. Pensioners will no longer benefit from a higher personal allowance a result of the introduction of the £10,000 annual allowance which is being phased in. The additional age related allowance will be scrapped for those reaching 65 on or after 6 April 2013. The justification behind the scrapping of the age related allowance is in order to simplify a complex personal allowance system that meant a large number of pensioners had to fill out Self-Assessment Tax Returns each year. In conclusion, we knew a lot about this year’s Budget before the Chancellor, George Osborne had even stood up. Unsurprisingly, the leakage was in respect of the good news and all else was left for the Chancellor to announce. An increase in the personal allowance, and the reduction in the 50% tax band and a clamp down on tax avoidance were all confirmed but some of the finer details reveal that a lot of the giveaways will not start until after this year and therefore is likely to prolong the agony of the recovery of the United Kingdom. What is more, there is little help for households battling rising living costs as fuel duty will rise as planned in August while the cost of alcohol and cigarettes will go up sooner. All in all, the Chancellor has attempted to bring about measures to stimulate growth from external sources and make Britain a more competitive place to be in the increasingly complex world of finance. However, it appears that the message is that we all have to make sacrifices now for a better future.

27-29-31-34-37-ADs_A4 Temp 21/05/2012 11:05 Page 31




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32-33-Suresh Vagjiani_A4 Temp 21/05/2012 10:03 Page 32

Grow your flowers where you can water them

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t was predictable that a government without money would soon start to milk one of the few sectors in the UK which is still growing rapidly, the Central London property market. Given the harsh measures implemented and proposed by the Government, the market has still continued to rise unabatedly. Stamp duty has risen to 7% for properties over £2m and 15% if a ‘non natural’ person is purchasing, this was done to prevent buyers using corporate wrappers to avoid paying taxes. Despite this last month, according to Knight Frank the applicants for £2m+ properties rose 13%, and the overall prices for Prime Central London rose 1.1% and sales were up 50% over the last three months compared to the same period last year. Furthermore a recent survey by Citi Bank and Knight Frank voted London as the city that matters most to global high-net-worth individuals, followed by New York, Hong Kong and Paris, this research was


published in The Wealth Report 2012. These findings reflect the results of a sentiment survey sent to HNWIs based on everything about a city from economic openness to its appeal as somewhere to live or visit. The results show London is the most important city to the world's wealthy. This demonstrates the London property market’s robustness to shrug off any attempt to dampen its continued growth. It seems that Central London grows in spite of the turmoil around the world. I would go so far as to say the turmoil around the world serves to fuel this market, as it is seen as a safe haven to park money in the current times of economic uncertainty. It is plain to see the growth and robustness there is in this market. So why do Indians tend not invest there? Here are some of the reasons we have found: Firstly there’s a saying ‘Grow your flowers were you

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32-33-Suresh Vagjiani_A4 Temp 21/05/2012 10:04 Page 33

extortionate amounts of money relative to the property price. Unless you have £750,000+ to invest it is generally difficult to get freehold in this location. The above are not the criteria to consider an investment. A property in London is a fairly liquid asset when one considers a property can be disposed of within a couple of months, as there are several auctions on a weekly basis. This means cash can be sitting in the bank after a two month period, simply by choosing to sell at auction. Therefore when investing in property it should be treated as a strict investment without any taint of emotion. The growth in property does not have to be extracted via a sale, it can also be refinanced within a four week period. This method also has the added beneift of no capital gains tax, as captial gains tax is only payable in the event of a sale. can water them’, Indians take this saying too literally, they like to invest near where they live, why? Because they can look after any maintenence issues themselves and then in the future their children can marry and live close by them, this is their hope anyway. The maintenance part will only save you a couple of thousand, if that, per annum. And as far as the children go that’s a post dated cheque… who knows what will happen. It is better to keep investments and residential preferences separate otherwise you will not achieve either objective well. The second main reason is they do not like Leasehold properties. They want freehold, so the property can stay in the family for the next 21 generations down the family line. It is also perceived to be a declining asset as the lease decreases every year. This certainly shows they think seriously for their future generations. But you must ask what is the objective of the purchase, is it to invest in a freehold or to make the most money in the shortest possible time? If it is the latter then this is what should be pursued. The point being the value should have increased substantially more as the lease gets shorter. Also the laws have changed to allow owners to extend their leases relatively painlessly and without the freeholder charging


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36-Editorial index + Credit box_A4 Temp 21/05/2012 15:36 Page 36

Editorial Index Topics


Practical steps for setting up a trading portfolio, investing in 2012. Who really wins and who loses in trading? How much land does a man need? Managing your banking and finance relationships in a challenging environment. Bonds with above average yields. Stock Exchanges: Where to now for the exchanges sector? The good, the bad and the ugly of the UK high street. How the Euro has affected the global market and trade? The P2M believe the future is green. Creating true Alpha. How hedging protects your business? Parent company liability for health & safety matters of a subsidiary company. Is it really a budget for growth? Grow your flowers where you can water them.

Rakesh Shah Alpesh Patel Amit Patel Rakesh Shah Ben Kumar Roger Aitken Nilesh Raj Patel Paresh Davdra Dina Bhudia Paresh Kiri Abhishek Sachdev Bhavini Kalaria Kiran D Patel Suresh Vagjiani

Page No. 7 9 11 29 15 16-17 19 20-21 22-23 24 25 26 28-30 32-33

Advertisers Index Company Name

Page No.

Afro Asian Insurance Services Ltd Bank of Baroda Bank of India Biscroft BTC Fab Homes Forum Insurance Gold Investment HW Fisher & Company Indigo Security Infinity Property Solutions Jalaram Money Transfer John Cumming Ross Ltd Lal Ondhia Life Policy Reclaim Ltd London School of Accountancy and Management Lyca Mobile

12 10 29 18 34 37 29 31 34 31 17 27 6 31 8 27 35

Company Name Lyca Mobile Ltd (Outside Back Cover) Major Estate New India Assurance P2M Ltd Pearson Claims Ltd Ramprate Ltd Rational Fx SAS Consultancy State Bank of India Telpak The London Law Practice Vintage Wines Investor (Front Inside) Water Mill Weston Kay Whizz Group of companies William Albert Securities Ltd (Back Cover) Zoom Finance Ltd

Page No. 40 29 33 23 29 34 81 25 4 27 31 2 25 14 27 39 37

Disclaimer The ideas and conclusions expressed in the articles are the author’s own and do not necessarily reflect the views of any particular company. They are for general interest only and should not be taken as investment advice or as an invitation to purchase or sell any specific financial product. The publishers of Finance, Banking and Insurance (FBI) magazine are not responsible for the individual

Editor/Publisher: CB Patel Associate Editor: Rupanjana Dutta

Asian Business Publications Ltd Karma Yoga House, 12 Hoxton Market (off Coronet Street), London N1 6HW. Tel: 020 7749 4085 Fax: 020 7749 4081

Email: aveditorial@abplgroup.com gseditorial@abplgroup.com www.abplgroup.com ŠAsian Business Publications Ltd


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views expressed by various authors in this publication and would like to direct readers to consult professional advisers or brokers if they require further information on any topic covered in this magazine. Some of the products, offers, opinions included in the articles and advertisements carry risk and readers should consider them at their own discretion.

Editor/Publisher: CB Patel Managing Editor: Kokila Patel Consulting Editor: Jyotsna Shah News Editor: Kamal Rao Chief Operating Officer: L George Chief Financial Officer: Surendra Patel Accounts Executive: Akshay Desai Business Manager: Alka Shah Advertising Manager: Kishor Parmar Business Development Manager: Rovin George, Nihir Shah & Urja Patel Graphic Designer: Harish Dahya & Ajay Kumar Customer Service: Ragini Nayak

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