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GOA, FRIDAY, 3 SEPTEMBER, 2010
Chances of US recession 25-30%: Greenspan PTI MUMBAI, SEPT 2
The chances of the US economy slipping into another recession are close to 25-30 per cent, a noted American economist said. "I see a third to fourth of a chance of a double dip (in the US economy)," noted American economist and former Chairman of the Federal Reserve of the United States, Alan Greenspan, said while addressing an audience through videoconferencing during an award function here yesterday. The chances that the US slips into another recession are 25-30 per cent, Greenspan said. According to him, to reduce the double dip probability, recovery in asset base should be created through rising asset
Rasna eyes Europe, West Africa PTI NEW DELHI, SEPT 2
RIL raises stake in EIH REUTERS MUMBAI, SEPT 2
Reliance Industries, controlled by billionaire Mukesh Ambani, has bought an additional 0.68 percent in EIH Ltd, raising its holding to 14.8% in the hotel chain. EIH said in a filing to the Bombay Stock Exchange the shares were bought from the market on Tuesday. Reliance, India's top-listed conglomerate that is diversifying into new businesses, said on Monday it had bought 14.12 percent of EIH for $217.5 million.
IRB Infra in pact with Indian Hotels REUTERS MUMBAI, SEPT 2
IRB Infrastructure Developers Ltd said on Thursday its unit has entered into a pact with Indian Hotels Co Ltd to construct and operate a Gateway Hotel for the latter at Kolhapur in Maharashtra.
LAUNCH PAD
Samsung to challenge iPad REUTERS SEOL, SEPT 2
Samsung Electronics' first tablet computer will go on sale in two weeks, it said on Thursday, joining the hunt to challenge Apple's iPad. Global handset vendors and PC makers including Nokia, LG Electronics and HewlettPackard Co are moving into the new category of devices, between traditional PCs and smartphones, taking a cue from Apple. Dell Inc said last month it was launching its new tablet device called the Dell Streak to US customers. "We see huge potential for this kind of product," YH Lee, head of marketing at Samsung Mobile said. The new Galaxy Tab, with a 7-inch screen, will go on sale in European markets in mid-September. The device, which uses Google's Android software, offers access to books, films and music. "Samsung is betting big on the tablet category with this device," said Ben Wood, re-
Mortein launches new range of coils, aerosols MUMBAI (PTI) -- Mortein, a leading pest control brand of Reckitt Benckiser, launched the all new Mortein PowerGard range of coils, liquid vaporisers and aerosols. The products are made from Reckitt Benckiser''s best- global formulations that work against all kind of pests found at home, a press release issued here said. Mortein aerosols offer an all-insect killer that has the power of two cans in one and, therefore, the consumer does not have to buy two separate aerosol cans for mosquitoes and cockroaches. All new Mortein PowerGard Coils, liquid vaporisers and aerosols are now available in premium packaging. The Mortein PowerGard Coils is priced at Rs 20, liquid vaporisers at Rs 49 for 45 nights and the combi-pack at Rs 54 and the Mortein PowerGard aerosols will be available at Rs 55 for a 150 ml can, it said.
Equifax credit information service in India MUMBAI (PTI) -- Equifax Inc, a global leader in information solutions, today said that it has begun providing its in-depth credit information solutions across India, using member-contributed data from the country’s largest banks and financial institutions. Equifax Credit Information Services (ECIS) brings Equifax’s global experience to the growing Indian economy through its joint venture with six leading Indian financial institutions. These are Bank of Baroda, Bank of India, Kotak Mahindra Prime Limited, Religare Finvest Limited, Sundaram Finance Limited and Union Bank of India. Equifax applied to the Reserve Bank of India (RBI) for a Certificate of Registration to establish the new credit information company under The Credit Information Companies (Regulation) Act, 2005, and was approved for a license in March of this year. "The emergence of India as a major influence in global commerce, and India’s own internal growth, require world-class customer insights and risk-management systems," Equifax Chairman and CEO, Richard F Smith, said in a statement here. "Our joint venture combines Equifax technology and international experience with a very large and growing database, managed and delivered entirely within India, to give our customers unmatched data and insights, in the most efficient and effective manner," he added. ECIS has implemented the most stringent standards in the industry for the verification of the information within its database, ensuring its high quality, the statement said. ECIS is one of only a select few companies granted a license to operate a credit information company in India. "Our in-country staffing, local hosting, volume and depth of files we already have, allows us to understand the Indian business community and its needs better than any other service provider," ECIS Managing Director & CEO, Samir Bhatia, said. "Lenders have told us they want new ways to be able to manage their portfolios," Bhatia said, adding "we will be providing a comprehensive suite of credit risk, customer retention/cross-sell and collection products based on the highest calibre data in the industry." Equifax's database includes information on more than 572-million consumers and more than 81-million businesses globally.
search director at CCS Insight, adding the success of Galaxy Tab -- which is clearly smaller than iPad with its 9.7-inch screen -- will depend on pricing. "If positioned carefully the Galaxy Tab could emerge as an operator-friendly alternative to Apple's iPad as it could be subsidised to extremely low price points in the run-up to the lucrative holiday sales season," he said. Samsung declined to give the price of Galaxy Tab, saying it will depend on operator packages in different countries. YH Lee said most European operators selling Samsung phones were set to also sell the Tab to their clients, and several operators would sell it in the United States. Last week research firm iSuppli forecast the iPad will likely account for nearly threequarters of worldwide tablet shipments this year, and hold at least 70 percent of the market in 2011 and 62 percent by 2012.
FMCG firm Rasna is planning to enter Europe and West Africa as part of an overseas expansion plan and expects contribution of export revenues to total turnover to double to about 40 per cent this fiscal, a senior company official said. The firm, which is eyeing about Rs 400 crore turnover this year, currently exports to 35 countries, including Middle East, USA, East and South Africa accounting for 20 per cent of it total sales. "We plan to set up our presence in markets of Europe and West Africa very soon as they offer strong potential for further export growth," Rasna VP International Operations Girish Jaggi told PTI. Rasna currently exports to 35 countries, including the Middle East, US, East and South Africa and currently contribute about 20 per cent of Rasna''s total revenues of about Rs 325 crore. "However, this year we are strengthening our focus on exports and hope to double the contribution to 40 per cent of revenues," Jaggi added. The company expects to close the current fiscal at a total turnover of Rs 400 crore. Primarily known as a beverages maker, Rasna also manufactures fruit jams, fruit cordial, tea, pickles, chutneys, precooked ready to eat curries and snacks, which are primarily exported.
prices. The US Central Bank has done an excellent job to tackle the finance crisis, he said. "You have to sovereign credit for private credit in the wake of the crisis," Greenspan said. While expressing concern over the long-term impact of Govt deficits, Greenspan said that this had been a crisis of unprecedented proportions, but he did not see another round of stimulus in the US. "We have had enough stimulus in the US for the moment. It is not a good idea to expand deficit levels in the US. Longerterm consequences of expanding deficits are 'extraordinarily negative.' We need to allow the markets to absorb stimulus and calm down," Greenspan said.
MF industry Aug assets rise 3.3% PTI NEW DELHI, SEPT 2
Snapping the two-month decline, the average assets under management of mutual fund houses rose by 3.30 per cent in August, as eased liquidity situation prompted corporates to park more money with MFs. The industry''s average assets under management (AUM) rose by Rs 21,992 crore, or 3.30 per cent, in August compared to that in the last month. The combined average AUM of 39 fund houses stood at Rs 6,87,559.54 crore at the end of August. The country''s largest fund house Reliance MF saw an addition of Rs 2,332 crore, or 2.28 per cent, to its average assets at Rs 1.04 lakh crore, data by the Association of Mutual Funds in India (AMFI) showed. Over the month, fund houses continued to buy debt instruments while they sold equities. Also, banks parked money into the MF schemes, which increased the assets managed by them, industry experts said. The assets of the second largest fund house, HDFC MF, increased to Rs 90,179 crore, a rise of Rs 5,550 or over six per cent over the last month. "Liquidity situation is easing and a lot of corporate money is flowing into the system. There has been huge inflow in Liquid Funds and Fixed Maturity Plans (FMP)," Kotak MF
BRICs: victims of success with global investors REUTERS SHANGHAI, SEPT 2
Shares of companies from the world's biggest developing economies are increasingly featuring in global fund portfolios, a possible reason why BRIC markets are underperforming in 2010 compared to emerging market peers. With many conglomerates from Brazil, Russia, India and China no longer limited just to emerging equity portfolios, stocks from the so-called BRIC group are starting to move in lock-step with developed market indices. The BRICs are also more highly leveraged to the global economy, with Brazil and Russia two of the world's biggest commodity exporters. Those factors, many believe, help to explain why the MSCI BRIC index is down 4 percent this year, similar to developed markets' 5 percent losses. Emerging stocks on the other hand are up half a percent. "The BRIC countries have a group of large-caps which compare in size quite favourably with developed market firms...if you are a global investor you need these BRIC large-caps in your portfolio," says Martial Godet, head of emerging markets at BNP Paribas Investment Partners, which manages 60 billion euros in emerging markets. "So when there is a downside correction globally, it reflects on the BRICs." Godet names Chinese CNOOC, Brazil's Petrobras and Banco do Brasil, India's Reliance, and Russia's VTB and Gazprom as the kind of large cap BRIC stocks global investors tend to buy. Thomson Reuters data shows BRIC beta to developed stocks -- the measure of volatility relative to the broader market -- at 1.1, having declined
steadily from 2.0 in 2006. That indicates they will likely move in line with developed markets. As the largest, most liquid emerging markets, BRIC stocks benefited first in the 2009 rally, with 90 percent-plus gains, notes Robert Ruttman, equities strategist at Credit Suisse. But they also suffered the biggest redemptions this year as the euro zone crisis and growing fears of a double-dip recession force investors to pare equity allocations in favour of bonds. "BRICs' size clearly matters for asset allocation especially in terms of institutional portfolio positioning," Ruttman said. "We will not see a sustained rally in BRIC stocks before the end of the current bull market in bonds." Obviously local factors are also an issue tending to depress BRIC shares -- Brazil's October elections for instance and capital-raising plans by bellwether stock Petrobras. Chinese shares are down 20 percent as Beijing tries to slow the economy and housing market. All this has forced investors to seek value in smaller, less correlated, more domesticallyfocused markets such as Thailand or Turkey which are up 15-20 percent in 2010. PARADIGM SHIFT This may dismay those who believe the BRICs, with a fifth of the world's gross domestic product, 40% of its population and huge infrastructure projects, are safe investment bets. Long-term, no one doubts the validity of the BRICs' economic story. But the evolution of their markets into global rather than purely emerging assets is a reflection of the paradigm shift investment patterns have undergone in recent years. For years, investors have bought shares in auto or apparel manufacturers listed in say, Germany, but with expo-
The major problem right now is an extraordinary amount of risk aversion, he said. According to Greenspan, the idea that economies can decouple is an illusion as emerging economies are closely connected with the developed world. "Emerging economies cannot hope to decouple from the developed world. The recovery of consumer demand in the US will be a critical part of sustaining growth in emerging economies," he said. While referring about stock markets, he said that the influence of stock markets on eco nomic activity is underestimated. "Stockmarkets should be seen as a leading indicator to the economy. The rebound in stock markets and other asset
sure to emerging markets. The next logical step for larger institutional players would be to buy shares in emerging companies themselves. As these companies have grown they have increasingly taken to listing shares overseas, via American Depositary Receipts (ADRs), making them more accessible to smaller investors. Frances Hudson, global schematic strategist at UK investor Standard Life, says her company holds ADRs of the big Brazilian companies, besides investing locally in China and India. "A listing in a developed market gives an extra level of reassurance," she said. "These BRIC companies are following the example the big South African companies set earlier. They are global companies for whom domicile is just a convention." The downside of course is that these big BRIC firms, especially those listed overseas, tend to be commodity, energy or tech firms that are heavily leveraged to global growth. Almost 40 percent of MSCI's BRIC index comprises cyclical, growth-sensitive energy and materials. For the Brazilian and Russian indices the ratio is 50 and 60% respectively, versus under 30% for the broader emerging equity index. No wonder India, where commodities are just a quarter of the market, is outperforming this year -- up 5 percent. Karol Chrystowski, a fund manager at Renaissance Capital in London says he prefers to get exposure to Russia via locally-focused firms such as grocery chain Magnit. "If you buy Gazprom, you are buying into the Chinese story. Chrystowski says. "If you hold Lukoil you are making a bet on US oil demand. It's not a play on Russia at all."
Head (fixed income & product) Lakshmi Iyer said. At the end of August, the asset base of ICICI Prudential MF stood at Rs 68,768.63 crore and UTI MF at Rs 64,173 crore. While, UTI MF''s AUM increased by Rs 1,965 crore or 3.16%, ICICI Pru MF managed to add only Rs 53 crore. The industry has been witnessing a decline in their asset base for two months -- June and July -on account of withdrawal by corporates and banks. However, MFs stayed away from equities during August even as stock market barometer Sensex gained 0.6 per cent. Over August, MFs invested over Rs 22,000 crore in debt instruments, while they pulled out Rs 3,169.60 crore from equities. Industry is witnessing huge redemption in equity schemes. Also fund houses are launching products with fixed income guarantee to attract customers to maintain their asset base, said an executive at a top fund house. Over the month, the assets of Axis MF increased by Rs 1,018 crore and that of L&T MF by Rs 413 crore. At the end of August, the AUM of Axis MF stood at Rs 4,055 crore and that of L&T MF was at Rs 3,798.89 crore. Of the 39 fund houses, the assets of as many as 10 funds witnessed a decline during the month. The funds which saw a decline are HSBC MF, Fortis MF, LIC MF and IDFC MF.
markets could help revive sentiments. Stock prices will be a lead indicator for a turn in any economy," he said. Indian economy is looking like one of the
strongest economies from a structural viewpoint, he said, adding "India is doing better than anybody in part because it is largely selfcontained."