Offline
| Post a Message | Explore Forums | Browse Stock Messages | Hot Discussions | Top rated Messages | Top Boarders | |
|
|
|
You are here : Moneycontrol  MMB Market View |
| The latest messages in different topics under Market View are displayed on this page |
Market View
Tracked by: 0 Boarder
Hi! guys .. I advice everyone to remain cautioned and respect their money and invest or withdraw as per their risk profile, I want to stick my neck out and say that markets will rally at least 20 percent from current levels till March 2009..happy festive season....
Rao suggests a fresh look for insce.cover for deposits
Banking & Financial Services - Sector
Posted by :
sambalaTracked by: 0 Boarder
Financial crisis raises questions on credit derivatives: India
Press Trust of India / Washington
India today raised questions about various aspects of structured products and derivatives in the credit market, whose limitations have been brought to the fore by the ongoing global financial crisis.
The unfolding crisis has revealed the weaknesses of structured products and derivatives in the credit markets," RBI Governor D Subbarao said at the meeting of the International Monetary and Finance Committee here on Saturday.
This throws up questions about the appropriateness of various structured products like credit derivatives and their financial stability implications, he said.
"Are exchange traded derivatives superior to over-the- counter (OTC) derivatives? Do we need to focus on prescribing and instituting appropriate clearing and settlement practices even for OTC products? In what way can we eliminate the shortcomings of the `originate-to-distribute` model?" he asked.
According to analysts, the sub-prime crisis turned into a systemic risk in the US as original lenders to sub-prime housing borrowers sold their portfolio to other players, through complex derivatives. Therefore, it is not clear what would be the size of losses and which other firms would succumb to the financial meltdown.
Last month, India`s Chief Economic Advisor Arvind Virmani had said that the global financial crisis has a lesson for India that it should exercise caution in opening up derivative products and initially permit only those which are exchange-traded.
"You have to be cautious. Say, for example, when derivatives are mentioned, the implication to me is that you should try and first open up derivatives which are exchange- traded because those are much more transparent," he had said.
...
In reply to:
Rao suggests a fresh look for insce.cover for deposits
Posted by : sambala
Global crisis may spread to India through equity, forex mkts: RBI
Press Trust of India / Washington October 12, 2008
The Reserve Bank has warned that the global financial crisis can spread to India through equity and forex markets, while money, debt and credit markets could be impacted indirectly due to the continuing onslaught.
However, the country may escape the worst consequences of the crisis, even as "the equity and the forex markets provide the channels through which the global crisis can spread to the Indian system," RBI Governor D Subbarao said here on Saturday.
Speaking at the International Monetary and Financial Committee Meeting of the Fund, he said the other three segments of the financial markets which could get affected indirectly are money, debt and capital markets.
He added that the cost of borrowings have increased for India Inc because of factors like risk aversions, deleveraging and frozen money markets, which is also affecting the availability of funds in the international markets.
Subbarao, who took charge as RBI Governor last month when the financial crisis was unfolding, said that the unavailability of funds in the international markets will mean additional demand for domestic bank credit in the near term.
Referring to capital flows, he said reduced interest of investors in emerging economies could impact capital flows "significantly" and the looming recession will impact Indian exports.
India`s exports during the first five months of the current fiscal registered a growth of 35.1 per cent to $81.2 billion as against $60.1 billion in the same period a year ago.
In the capital market, FIIs have net pulled out $10.05 billion in 2008 so far, while they have net pumped in $2.15 billion in the debt market, according to Sebi figures.
Tracked by: 0 Boarder
Hi! guys so who is the real papu, one who is selling at these levels or one who are buying at these levels, lets fast forward few years and look back and laugh on these papu FII`s buying stokcs again when sensex might have already gained 30-40%, FII and these funds managers always come to party when stocks are over valued and start selling when prices are undervalued, imagine what would they have earned by withdrawing money from India, when they were buying stocks at 21k levels sensex, and dollar at 40 levels and now selling at 10k levels and when dollars is 48-49 levels. I sometimes feel what intelligence level they have ....India and China even if their is a global recession will be growing at minimum 6% GDP now when all other economies are growin minus and India is growing at 6% money will bound to come back again, so dont be a papu by selling now, make them a papu when they come back at start buying at much higher levels. Happy investing...
Rao suggests a fresh look for insce.cover for deposits
Banking & Financial Services - Sector
Posted by : sambalaTracked by: 0 Boarder
Global crisis may spread to India through equity, forex mkts: RBI
Press Trust of India / Washington October 12, 2008
The Reserve Bank has warned that the global financial crisis can spread to India through equity and forex markets, while money, debt and credit markets could be impacted indirectly due to the continuing onslaught.
However, the country may escape the worst consequences of the crisis, even as "the equity and the forex markets provide the channels through which the global crisis can spread to the Indian system," RBI Governor D Subbarao said here on Saturday.
Speaking at the International Monetary and Financial Committee Meeting of the Fund, he said the other three segments of the financial markets which could get affected indirectly are money, debt and capital markets.
He added that the cost of borrowings have increased for India Inc because of factors like risk aversions, deleveraging and frozen money markets, which is also affecting the availability of funds in the international markets.
Subbarao, who took charge as RBI Governor last month when the financial crisis was unfolding, said that the unavailability of funds in the international markets will mean additional demand for domestic bank credit in the near term.
Referring to capital flows, he said reduced interest of investors in emerging economies could impact capital flows "significantly" and the looming recession will impact Indian exports.
India`s exports during the first five months of the current fiscal registered a growth of 35.1 per cent to $81.2 billion as against $60.1 billion in the same period a year ago.
In the capital market, FIIs have net pulled out $10.05 billion in 2008 so far, while they have net pumped in $2.15 billion in the debt market, according to Sebi figures.
...
In reply to:
Rao suggests a fresh look for insce.cover for deposits
Posted by : Leave it.
RBI Governor suggested better coordination among authorities and revisiting the roles of central banks, regulators, supervisors, and fiscal authorities regarding financial stability.
Further, he said that the bailout packages announced in recent weeks would have an impact on the regulatory architecture of the financial system and on the fiscal position of countries.
Subbarao also suggested that there is need to look at the deposit insurance coverage and whether the scope should be extended to money markets and mutual funds.Pointing to the crisis revealing the weaknesses of structured products and derivatives in the credit markets, Subbarao said there were questions related to exchange-traded derivatives being superior to their over-the-counter counterpart.
v.krishnamoorthy
Tracked by: 110 Boarders
Maximum downside of 3,050
Last week saw global carnage with all the major markets down by double-digits. The Nifty lost over 14 per cent at 3,279.95 points and it hit a low of 3,199 on Friday. The Sensex was off 15.95 per cent and the Defty down 16.65 per cent as the rupee tested support at Rs 49 before settling at Rs 48.72.
The FIIs have sold close to Rs 5,000 crore of equity in October and Indian institutions have sold about Rs 900 crore. Smaller stocks were harder hit with the Nifty Junior and the Midcaps 50 down 19.9 per cent and 21 per cent respectively. The BSE 500 was off 17.5 per cent. Volumes were moderate and calculation of advance-decline ratios was absurd, since there were almost no advances.
Outlook
Next week prices are likely to move between 3,050-3,450. By closing below 3,800, the market set a maximum downside target of 3,050-3,100, which could be fulfilled. Momentum indicators are oversold but prices could fall until short-covering is triggered close to settlement. But any bounce will be very sharp and a 200-250 point rise in a single-session is likely sometime next week. Either way, big intra-day swings are probable.
Rationale
There has seldom if ever, been a down move of comparable dimensions. Chart patterns of support/resistance are now based on mid-2006 trading patterns. Volumes have been low. There is no major short-term resistance between the Friday close of 3,279 and 3,450. A single session of buying could therefore drive prices up a lot.
Counter-view
Gut-feel says delivery-backed selling will continue, interspersed with occasional short-covering. But there is a chance the market could recover and consolidate with range-trading between 3,400-3,800. The intermediate downtrend started in mid-July and could mature over the next week or two.
Devangshu Datta
...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : sambala
Global panic on markets as US bailout fails to stem credit crisis
A global tsunami of panic wiped nearly 8 per cent off the value of the FTSE 100 index today and hit other markets equally hard as investors decided that Friday`s $700 billion bank bailout would not be enough to ease the credit crisis.
The benchmark index on the London Stock Exchange closed at 4589.19, down 391.06, or 7.85 per cent fall, led by miners and banks. It was the third-worst percentage fall since the FTSE 100 was created in 1984.
Shares also plunged on Wall Street – the Dow Jones Industrial Average, which dropped below 10,000 for the first time in four years, was about 4 per cent down when trading closed in London - and across Western Europe.
In the emerging markets, however, it was nothing short of carnage. Russia`s RTS exchange suspended trading twice as prices dropped 19.10 per cent, the market`s worst ever one-day fall. Trading was also halted twice on Sao Paulo’s Ibovespa index after stocks sank 10 per cent and then another 5 per cent.
"There is all-out panic," said Adrian van Tiggelen, a senior strategist with ING bank in The Hague.
For policymakers and central bankers, it was a nightmare start to the week – little helped by the failure of EU leaders to agree on a European banking rescue scheme or even, it appeared, on a common strategy.
There was continued confusion as to the detail of Germany`s decision to guarantee all private bank deposits as Austria and Denmark broke ranks to follow suit and Spain threatening to do so if the EU did not take action.
Both Gordon Brown and Alistair Darling, the Chancellor, were working the phones. Mr Brown discussed the crisis with President Sarkozy of France this morning and was due to talk with Angela Merkel, the German Chancellor, later today to clarify Germany`s plans.
"In the last 24 hours, the Prime Minister and the Chancellor have been spending a lot of time on the phone. We continue to urge cooperation at an EU and international level," his spokesman said.
No stock was in positive territory on the UK benchmark index but banks were again among the biggest fallers. The Royal Bank of Scotland lost more than a fifth of its value, HBOS fell 19.8 per cent and Barclays shareholders saw almost 15 per cent wiped off the value of their holdings.
An emergency Commons statement from Mr Darling did nothing to calm City nerves – especially when it became apparent that he had nothing new to offer savers despite hinting at some "pretty big steps" yesterday.
As stocks fell, investors fled to government bonds and the relative safety of the Japanese yen, which gained 1.7 per cent against the dollar.
The euro was particularly hard hit by the failure of the leaders of Europe`s four biggest economies to agree on a co-ordinated bailout plan at a weekend summit, losing 1.2 per cent against the dollar and around 3 per cent against the yen.
"We are seeing an intensification of risk aversion overnight and the main beneficiaries are the yen and dollar," said Lee Hardman, a currency economist at Bank of Tokyo-Mitsubishi-UFJ.
"The market is in an extreme state of paralysis."
The markets were also in meltdown in Iceland, where foreign currency reserves have all but dried up because of the credit crunch.
The Icelandic crown lost a stunning 30 per cent of its value, following steep declines last week, as ministers worked on an emergency plan to save the banking system. All dealing in the shares of the country`s six major financial institutions were suspended.
Tracked by: 0 Boarder
They will tend to move towards gold. So, that can change and a huge demand will show itself for gold from developing markets as people want to diversify. And gold is now breaking out of the technical trading range of almost thirty years between $300 to $900 an ounce. So if it breaks out of the $1,000 an ounce barrier, there could be a sharp up movement in gold. I am not very fond of gold, but as a temporary measure it might help stabilise a portfolio and provide insurance.
Would the earnings growth remain at these levels or will there be a downgrade?
I think it is up in the air. Considering the IIP numbers are down, confidence of the consumer has shaken, confidence of global business has shaken, whether it is technology, steel, or refineries earnings will be muted. I do not have the exact numbers, but I would expect that the pace would the poorest in the last five years. I think the growth premium is over. Companies that require capital to grow and instead of growing through internal accruals, those that have borrowed money from all corners–will find the going hard. So growth will have to come down and if investors want protection the only safe haven are places like FMCG and companies that are deleveraged.
What is your view on the commodities stocks now?
Commodity stocks are not necessarily good long-term investments. I think the global growth will slowdown so the demand for commodities be it oil, zinc or copper will tend to slowdown. Globally, the demand destruction is going on. Till some time we were worried about the inflation, but now we are worried more on deflation. And during deflationary times, commodities do tend to underperform.
How much money have FIIs pulled out and your view on FII investments coming to India?
FII selling is inevitable, they sold about $10 billion in India or about 13 per cent of the total investments they have made in India. Since there is no liquidity they might not be able to sell aggressively. It will take time for the FIIs to invest once gain into the Indian markets. In a period of contracting liquidity, money that chased emerging markets, commodities, art, and real estate will slow down. We will all go back to limited liquidity, you will have to prove that you are worth the money. So, if you hold cash you might be able to pick up some unbelievable bargains.
...
In reply to:
`Recovery might take a long time`
Posted by : sambala
The severe liquidity crunch in the global financial markets has led to a flight of capital from the Indian equity markets. This has resulted in the markets plunging to record lows with little hope for recovery in sight in the near term. What has caused this, why have the Indian markets reacted in such a manner and what to do in such a situation are questions that are topmost in the minds of equity investors.Ramesh Damani, member BSE and a well know name in the Indian equity markets analyses the past, present and future trends in an interview to Vishal Chhabria and Jitendra Kumar Gupta.
What’s your perception of the troubled financial markets and its impact on India?
It’s pretty serious and one in a hundred year event. I think you can trace this back to 1980, when global markets took off led by the Dow and was followed by emerging markets and other asset classes. Two things stand out–deregulation and American style democracy. I think we probably have swung the pendulum too far in both those areas. As Lenin, was fond of saying, “A capitalist will sell you the rope with which you are going to hang him.” That is what Western financial institutions have done. They have hung themselves with their own bill of goods.
Will the crisis engulf Asian economies?
It is doing that already and Asian markets are also falling. This is because America is the largest consumer of products made in Taiwan, Hong Kong or China. India’s economy is off course driven by domestic factors and some what insulated, but you know when there is collateral damage you can see panic across the street. So some part of it is collateral damage and some is due to excesses in our own market.
Is the worst over, what are the early signs that indicate this?
The bear market has two dimensions; one is price the other time. And clearly on the price front we will stop falling at some point, we are not at the bottom yet, but will probably get to the bottom soon. But the time dimension can sometime be quite long in a bear market. To give an example, the second largest economy in the world (Japan) had the twenty five year bull run, which ended in the 1989.
The index went to 40,000 and from there, even as I speak to you, it is below 10,000 and we are getting into the twentieth year. So once a bubble breaks, often the time dimension can take the entire generation to forget the excesses that took place in the previous bull market. So we have been too used to very sharp ‘V’ shape recoveries occurring in the global economy. My sense is that the recovery is going to happen over a long time or ‘U’ shape rather then a ‘V’ shape recovery. Overall, it is classic symptom of a bear market where the headline stocks fall and at some time we will have capitulation.
From the Indian point of view, where are we in the cycle?
Let’s take any country that goes through a period of economic phases. We might now be entering a phase where the economy will continue to do well, we might see 6-6.5 per cent growth this year may be 5 per cent one year down the road. So the economy will continue to grow at 5 per cent is not bad in a world that is growing at 2 per cent. But stock markets might go nowhere.
So there are two different things investors have to look at, one the economy will continue to do well, but that is already priced into the market. For example, in 1992, the Hindustan Lever was Rs 330 per share, even today 20 years later the price is Rs 240. So a number of good stocks get priced and then continue to move sideways for years to come. There is no relationship, that if the economy does well, the markets have to do well.
Would you opt for stocks, bonds or altogether different asset class like gold?
Every year there is particular asset class which has done well like during the seventies, Japanese stocks did well, in the eighties America had a bull run, in the nineties technology stocks did well and of late, the emerging market stocks have been the stars. So every decade is marked by fondness for a particular asset class. The one asset class that has not really worked is cash and given the liquidity crunch in the market and given the fact that the money has dried up, my sense is that the cash might command a premium in the market.
Cash will be king. So those who have cash might be able to buy assets at throw away prices. My suggestion to investors is that you should have at least 20-30 per cent of your portfolio in cash, also as an alternate I will also suggest about 2-5 per cent of portfolio in gold. However one must understand that gold is a non-productive asset, which does not pay any dividend and there is a holding cost to gold. However, central bankers and institutions have debased currencies and financial instruments so much that people will not trust those currencies and financial instruments anymore.
Tracked by: 0 Boarder
The severe liquidity crunch in the global financial markets has led to a flight of capital from the Indian equity markets. This has resulted in the markets plunging to record lows with little hope for recovery in sight in the near term. What has caused this, why have the Indian markets reacted in such a manner and what to do in such a situation are questions that are topmost in the minds of equity investors.Ramesh Damani, member BSE and a well know name in the Indian equity markets analyses the past, present and future trends in an interview to Vishal Chhabria and Jitendra Kumar Gupta.
What’s your perception of the troubled financial markets and its impact on India?
It’s pretty serious and one in a hundred year event. I think you can trace this back to 1980, when global markets took off led by the Dow and was followed by emerging markets and other asset classes. Two things stand out–deregulation and American style democracy. I think we probably have swung the pendulum too far in both those areas. As Lenin, was fond of saying, “A capitalist will sell you the rope with which you are going to hang him.” That is what Western financial institutions have done. They have hung themselves with their own bill of goods.
Will the crisis engulf Asian economies?
It is doing that already and Asian markets are also falling. This is because America is the largest consumer of products made in Taiwan, Hong Kong or China. India’s economy is off course driven by domestic factors and some what insulated, but you know when there is collateral damage you can see panic across the street. So some part of it is collateral damage and some is due to excesses in our own market.
Is the worst over, what are the early signs that indicate this?
The bear market has two dimensions; one is price the other time. And clearly on the price front we will stop falling at some point, we are not at the bottom yet, but will probably get to the bottom soon. But the time dimension can sometime be quite long in a bear market. To give an example, the second largest economy in the world (Japan) had the twenty five year bull run, which ended in the 1989.
The index went to 40,000 and from there, even as I speak to you, it is below 10,000 and we are getting into the twentieth year. So once a bubble breaks, often the time dimension can take the entire generation to forget the excesses that took place in the previous bull market. So we have been too used to very sharp ‘V’ shape recoveries occurring in the global economy. My sense is that the recovery is going to happen over a long time or ‘U’ shape rather then a ‘V’ shape recovery. Overall, it is classic symptom of a bear market where the headline stocks fall and at some time we will have capitulation.
From the Indian point of view, where are we in the cycle?
Let’s take any country that goes through a period of economic phases. We might now be entering a phase where the economy will continue to do well, we might see 6-6.5 per cent growth this year may be 5 per cent one year down the road. So the economy will continue to grow at 5 per cent is not bad in a world that is growing at 2 per cent. But stock markets might go nowhere.
So there are two different things investors have to look at, one the economy will continue to do well, but that is already priced into the market. For example, in 1992, the Hindustan Lever was Rs 330 per share, even today 20 years later the price is Rs 240. So a number of good stocks get priced and then continue to move sideways for years to come. There is no relationship, that if the economy does well, the markets have to do well.
Would you opt for stocks, bonds or altogether different asset class like gold?
Every year there is particular asset class which has done well like during the seventies, Japanese stocks did well, in the eighties America had a bull run, in the nineties technology stocks did well and of late, the emerging market stocks have been the stars. So every decade is marked by fondness for a particular asset class. The one asset class that has not really worked is cash and given the liquidity crunch in the market and given the fact that the money has dried up, my sense is that the cash might command a premium in the market.
Cash will be king. So those who have cash might be able to buy assets at throw away prices. My suggestion to investors is that you should have at least 20-30 per cent of your portfolio in cash, also as an alternate I will also suggest about 2-5 per cent of portfolio in gold. However one must understand that gold is a non-productive asset, which does not pay any dividend and there is a holding cost to gold. However, central bankers and institutions have debased currencies and financial instruments so much that people will not trust those currencies and financial instruments anymore.
...
Indian banks have $1 bn exposure to five troubled institutions
Banking & Financial Services - Sector
Posted by : sambalaTracked by: 0 Boarder
MTM loss notional, small in relation to balance sheets, says RBI
Indian banks through their overseas branches and subsidiaries have a combined exposure of around $1 billion to five troubled institutions — Wachovia, Washington Mutual, AIG, Fortis and Lehman Brothers.
Though the combined marked-to-market (MTM) losses of the Indian banks were estimated at $450 million at the end of July this year, the Reserve Bank of India (RBI), which is monitoring the situation closely, believes that the losses are notional and will only arise if the counter-party does not pay.
“There is no reason to worry as four of the troubled institutions, barring Lehman, have been bailed out… We are monitoring the impact on the spreads,” RBI Deputy Governor V Leeladhar told Business Standard.
The banks do not have any direct sub-prime exposure. Some of the exposure is to collateralised debt obligation (CDO) and credit default swaps (CDS). CDOs are complex derivatives that pool loans extended by banks, and the payment and returns are on the basis on risk categorisation. CDSs are loan default insurance packages.
According to data compiled by RBI, the MTM loss for public sector banks was estimated at $90 million, while for private banks it was around $360 million at the end of July.
Of the total exposure, around $330 million is to Lehman Brothers, which has filed for bankruptcy in the United States. The other institutions — Fortis, Washington Mutual, Wachovia and AIG — have either received a bailout from the government and the central bank or have been merged.
Leeladhar stressed that the total exposure and the MTM losses were both small, given the balance sheet size of Indian banks.
As for domestic transactions, Leeladhar said that RBI, in tandem with the Fixed Income Money Markets & Derivatives Association, had managed to get eight Indian banks, including a primary dealer, to successfully settle the exposure to Lehman’s interest rate swaps. The notional amount involved was around Rs 60,000 crore, and the net settlement amount was Rs 50 crore, which Lehman paid out.
As for the billion-dollar exposure overseas, ICICI Bank’s exposure to the five troubled American and European institutions is estimated at $230 million. While ICICI Bank has no investment in Fannie Mae, Freddie Mac or Landsbanki of Iceland, it has exposure of a little over $100 million to Morgan Stanley, which has converted itself into a bank holding company.
ICICI Bank has said it has no direct exposure and the investment was made by its overseas subsidiaries. In the case of Lehman, ICICI Bank’s UK subsidiary had exposure of around $80 million, against which there are provisions of $12 million. The bank has said that it may have to provide an additional $28 million, assuming 50 per cent recovery takes place.
In the past, the bank has said that its exposure to global paper was to the tune of $3 billion. Of this, around $600 million was in mortgage-backed securities and another $500 million in corporate bonds.
...
Tracked by: 0 Boarder
2009 Will Be `Very Tough Year`
The boss of global advertising and marketing giant WPP has told Jeff Randall Live that the "real world" will not feel the devastating effect of the credit crunch until next year.
Sir Martin Sorrell said 2009 will be a "very tough year" but predicted that there would be some recovery in 2010.
He said a number of big institutional shareholders had told him at a "very depressing" City roadshow that they were looking for a cut in the interest rate on Thursday.
Sir Martin blamed the market instability on the indecision and the "lack of leadership" among western governments.
Markets: Is Indecision To Blame?
The FTSE 100 suffered its worst day since the crash of 1987 and the Dow experienced a record one-day drop and was trading at its lowest level for four years.
The marketing guru said the delay in Congress passing a crucial plan to rescue America`s banks and the upcoming US election were partly responsible.
He said: "No senator or congressman wants to take a position that angers or enrages their constituent."
Sir Martin also criticised European countries for not having a concerted plan of action for tackling the problem.
He noted: "Ireland and Greece are going off on their own and now we`ve got Germany ploughing their own furrow."
Sir Martin admitted that more red tape was a consequence of governments pouring extra money into the banking system.
"If you go back in history, after 1928-29, there was excessive regulation, the pendulum always shifts too far," he said.
But he conceded it was understandable, given what happened recently with Lehman Brothers.
However, Sir Martin attacked the Treasury`s changes to tax rules that he claims will cost his company £60-70m.
He said it was a "difficult decision" to move WPP`s headquarters to Dublin but insisted the money saved will be plouged back into the British economy.
He added that there will be no changes to the number of jobs at the company.
...
In reply to:
Tough Time Never Last - Tough People do !!
Posted by : sambala
Developing Countries Fear Fallout
Signs of stress are growing on banking systems in many emerging and developing economies, the head of the International Monetary Fund has said.
IMF Managing Director Dominique Strauss-Kahn warned finance and development ministers that the more severe and protracted the financial crisis becomes, the more emerging and developing countries will be affected.
Already, stock markets in emerging economies have declined as investors flee riskier assets and businesses find credit harder to come by.
The IMF and World Bank meetings in Washington turned to development issues and poverty but worries about the global credit crunch remained front and centre.
Many developing countries worry that major economies, preoccupied with the financial crisis, will slow aid.
Banks are important to fund projects in the developing world and with tightening credit, resources will become stretched.
"The fallout for most banking systems in emerging and developing economies has been limited so far. But signs of stress are growing," Mr Strauss-Kahn told the World Bank and IMF development committee.
He flagged dangers in Eastern Europe, where domestic banks have built up large negative net foreign positions through foreign parent banks, which are vulnerable to market sentiment because a large part of their funding is from wholesale markets.
Also, banks have become increasingly exposed to struggling real estate markets. They have not experienced a significant increase in loan losses so far, but have increased provisions for bad loans and may be forced to reduce credit growth if asset quality deteriorates sharply, he said.
Mr Strauss-Kahn said the combination of tightening credit markets, rising domestic interest rates and the global growth slowdown could increase the force of the credit squeeze and rising defaults to a larger number of emerging markets and some developing countries.
On a positive note, he said strong growth rates would help cushion many emerging and developing countries from harder financial times.
Overall, he said emerging economies have so far escaped the declines to external financing seen in previous episodes of financial turmoil.
But that does not mean they would stay out of the direct path of the financial storm.
"Vulnerabilities are increasing and some countries with large current account deficits have had more difficulty financing them," Mr Strauss-Kahn said.
Sky News
Tracked by: 110 Boarders
Excellent article. SEBI`s decision reg. P note and SBL mechanism helped(FIIs), whose ultimate beneficiaries continue to remain faceless, are allowed to short sell physical stock with impunity through the PN route. Even the US has banned short-selling. Why should India allow foreigners bringing non-transparent money to India to profit from the bear market? We have no idea.
Instead of taking measures such as this, SEBI sent the wrong signal last week by reversing the policy on PNs and permitting foreigners to issue more of this paper at a time when they are withdrawal billions from Indian market and nifty may touch 3900.OK...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
vtycoon
dude....pls sugest me..
m 2 lots short PNB @465....i have been holdin da shorts....wat do u sugest 2 me
Tracked by: 0 Boarder
Some bodies are not getting buried for up to TWO months because CASH-strapped funeral directors are having to wait for the government to foot the bill, it has been claimed.
Undertakers hit by the CREDIT CRUNCH are refusing to carry out FUNERALS until the Department for Work and Pensions has confirmed it will pay out for families on benefits.
Bereaved relatives can apply to the DWP for help with FUNERAL costs if they can prove they are receiving benefits and cannot afford to pay.
Some 27,000 people receive cash from the Social Fund every year, totalling £46m.
Typically each gets up to £700 towards the COFFIN and collection of the deceased, plus another £1,000 for other expenses such as CREMATION fees.
One leading firm of undertakers told the Mail on Sunday that his colleagues were being put in an "impossible" position because they could not afford to extend credit.
John Weir, of the National Society of Allied and Independent Funeral Directors, said: "Funeral directors are having to take a more commercial approach in these troubled times.
"The normal gap between death and burial is about 10 days, but the Government`s stance means it can be more like five weeks and sometimes longer.
Daniel Kawczynski, the Tory MP for Shrewsbury, said he would table a question in Parliament on the issue after being contacted by grieving families.
One of Mr Kawczynski`s constituents is Shrewsbury funeral director Clive Pugh, who is still waiting to bury a 77-year-old man from Powys in Wales who died on August 13.
His daughter made an application for financial help on August 18, but it was not cleared until October 9. The funeral will finally take place on Friday - nearly NINE weeks after his DEATH.
"The daughter is being pretty stoic about it, but I feel terrible," Mr Pugh said.
"I can`t just lend out money unsecured and without interest - my outgoings are around £15,000 a month and if I didn`t get the money upfront I would go bust."
A DWP spokeswoman said: "It`s obviously a difficult time for any family following the death of a relative and that`s why we make sure applications are processed as quickly as possible with the majority done in 16 days or less.
"So that we can make payments quickly and ensure they go to the people who need them most, we need the right information from people.
"Sometimes we may have to go back to the relative to get details they have left out which could lead to a delay."
...
Rao suggests a fresh look for insce.cover for deposits
Banking & Financial Services - Sector
Posted by : Leave it.Tracked by: 0 Boarder
RBI Governor suggested better coordination among authorities and revisiting the roles of central banks, regulators, supervisors, and fiscal authorities regarding financial stability.
Further, he said that the bailout packages announced in recent weeks would have an impact on the regulatory architecture of the financial system and on the fiscal position of countries.
Subbarao also suggested that there is need to look at the deposit insurance coverage and whether the scope should be extended to money markets and mutual funds.Pointing to the crisis revealing the weaknesses of structured products and derivatives in the credit markets, Subbarao said there were questions related to exchange-traded derivatives being superior to their over-the-counter counterpart.
v.krishnamoorthy...
Tracked by: 0 Boarder
Coordinated plans on bank crisis should work, IMF head says
WASHINGTON (MarketWatch) -- Leading economies now have coordinated, detailed and comprehensive plans to resolve the severe credit crisis that has put the financial system on the brink of a meltdown, said Dominique Strauss-Kahn, managing director of the International Monetary Fund. Speaking at a press conference Sunday following two days of intense talks on two continents, Strauss-Kahn said almost all of the affected nations now have taken strong actions to shore up their financial sectors. He said moves by the euro zone leaders in Paris were "exactly the type of action" that is needed to reassure very jittery markets. "We will see tomorrow" what the market reaction is, but "I am confident," he said.
...
In reply to:
Is indian economy collapsing????!!!!
Posted by : marketman
We have been listening indian growth stories for few years.... our financial markets too witnessed the same trend till recently.... our policy makers repeatedly assuring the investors about the strongness of indian economy.... they are saying india is immune to world financial crisis....
But indian financial markets too collapsing along with the global cues.... almost all investors and many corporates are already in deep troubles.... few are doubting at some pvt sector banks for their suspicious behaviour....
We are also part of globe,india is not from any other planet.... this common logic is ignored by our policy makers and talking nonsenses on daily basis to confuse/mislead the indian investors aswell as indian public....
Atleast the chiefs of global economy taking few steps to control the situation,we havnot seen any types of mesures or useful decisions so far in india.... already stock markets fell more than 50% from their peaks within few months.... banks are struggling for survival,many corporates facing liquidty problem,few companies at the threshold of removing employees from payrolls,experts epecting subprime type issues may occur soon in india too.... interestingly indian rupee is weaken much within short span of time....
By seeing/experiencing all these ill effects,even patriotic indians doubting about the situation of economy in the country.... few people asking questions like Is indian economy too collapsing?!
Tracked by: 0 Boarder
I want to tell our compatriots in all the countries of Europe that they can and should have confidence," summit host French President Nicolas Sarkozy said.
Sarkozy hoped the momentum from Sunday`s meeting wouldn`t stop at Europe`s borders, and renewed his call for a summit of major world economies to help rebuild an international financial system "to make European ideas triumph."
European Central Bank Chief Jean-Claude Trichet welcomed the unity of Europe`s leaders — but warned there is more work to do.
"The force of unity that we showed today is a fundamental element of confidence," said European Central Bank Chief Jean-Claude Trichet.
But "there are still many things to do," both by governments and central bankers, Trichet added.
European Commission President Jose Manuel Barroso said: "Our analysis isn`t of an immediate miracle."
The plan follows Britain`s 50 billion-pound ($88 billion) plan to partly nationalize major banks and promised to guarantee a further 250 billion pounds ($438 billion) of loans to shore up the banking sector.
But there was no sum given on how much the EU measures would cost, and Sarkozy said each country would decide how much it would spend.
British Prime Minister Gordon Brown, who met with Sarkozy earlier Sunday, said: "I believe that there is common ground now about what needs to be done, that it has to be comprehensive, and it has to be all countries working together to get to the bottom and solve what is a global financial problem."
Sarkozy said the measures — which also include new accounting rules for banks — will be enacted "without delay" in the 15 countries using the euro.
On Monday, the governments of Italy, Germany, France and others will present their individual ways of implementing the measures. The rest of the 27-member EU will have a chance to sign up to the measures when the countries meet Wednesday.
The statement by EU leaders said they agreed to "avoid the failure of relevant financial institutions, through appropriate means including recapitalization."
Governments would guarantee "for an interim period and on appropriate commercial terms" new debt issued by banks for up to five years.
"This scheme would be limited in amount, temporary and will be applied under close scrutiny of financial authorities until Dec. 31, 2009," it said.
Sarkozy said the measure taken by the leaders is "not a gift to banks."
"Banks need to be loaned money," he said. "So that this confidence is restored, states will have the possibility to guarantee the loans that banks take out, guarantee them under different forms."
German Chancellor Angela Merkel said the measures "will allow markets to start functioning again, that was our aim. It is a strong message to the markets."
As the financial crisis drags down the global economy, world leaders are scrabbling for a way to stop the panic. But efforts to agree on a coordinated global response have stumbled as leaders seek to address the unique challenges of their own countries.
"It`s not easy," said Sarkozy. "We have different traditions. For some of us we don`t have the same currency. We have different regulators."
But, he said, "In a situation of urgency we had to take responsibility."
Even within the 27-nation EU, some countries are facing the collapse of a housing market, some have had to step in to save banks, while others have faced different problems.
Finance ministers from the Group of 20, which includes rich countries and major developing nations such as China, Brazil and India, meeting in Washington this weekend, pledged to intensify their efforts to unblock a frozen financial system before it does more damage to an increasingly shaky global economy — but made no concrete offers of new moves
...
In reply to:
G-7: `Urgent action` needed
Posted by : sambala
Euro nations to guarantee bank refinancing
PARIS - Nations in Europe`s single-currency zone agreed Sunday to temporarily guarantee bank refinancing and pledged to prevent banks failing as part of a raft of emergency measures designed to get credit flowing again.
It was Europe`s most unified response so far to the global financial crisis and addresses a key part of the problem: banks` reluctance to lend to each other. That has helped fuel the crisis that has pulled down some of Wall Street`s most storied names and is threatening the core of the U.S. and European economies.
After the Dow Jones industrial average ended its worst week in history, plummeting more than 18 percent last week, world leaders scrambled all weekend for a way to unblock money markets before they open Monday.
At an emergency summit of leaders of the 15 euro-zone countries in Paris on Sunday, European governments agreed to guarantee new bank debt until the end of 2009, allowed governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion.
But it stopped short of a one-size-fits-all solution: It`s up to individual governments to announce how they will implement the measures.
Tracked by: 0 Boarder
Euro nations to guarantee bank refinancing
PARIS - Nations in Europe`s single-currency zone agreed Sunday to temporarily guarantee bank refinancing and pledged to prevent banks failing as part of a raft of emergency measures designed to get credit flowing again.
It was Europe`s most unified response so far to the global financial crisis and addresses a key part of the problem: banks` reluctance to lend to each other. That has helped fuel the crisis that has pulled down some of Wall Street`s most storied names and is threatening the core of the U.S. and European economies.
After the Dow Jones industrial average ended its worst week in history, plummeting more than 18 percent last week, world leaders scrambled all weekend for a way to unblock money markets before they open Monday.
At an emergency summit of leaders of the 15 euro-zone countries in Paris on Sunday, European governments agreed to guarantee new bank debt until the end of 2009, allowed governments to help banks by buying preferred shares, and vowed to rescue important failing banks through emergency recapitalizion.
But it stopped short of a one-size-fits-all solution: It`s up to individual governments to announce how they will implement the measures.
...
In reply to:
G-7: `Urgent action` needed
Posted by : sambala
Highlights of Paulson statement at World Bank
Highlights of Treasury Secretary Henry Paulson`s statement Sunday to a meeting of the World Bank`s development committee, as provided by the Treasury Department:
We meet at a time when the global economic environment is undergoing the most serious stresses in recent memory. Financial market developments are having an acute impact on advanced economies and we can expect the crisis to have major ramifications for emerging markets and the poorest countries as well. These events will test the ability of the World Bank and the IMF (International Monetary Fund) to respond effectively, and it is imperative that they stand ready to deploy their resources to mitigate the impact of this crisis, especially on the poorest and most vulnerable.
Just a few months ago, we focused on the vital role of the international community in responding swiftly to the challenges posed by the large increase in food and fuel prices. The response was gratifying, with bilateral and multilateral donors committing substantial amounts of new assistance, and I commend (World Bank) President (Robert) Zoellick for leadership in helping coordinate a timely international response.
Now, these same countries are likely to face a host of new pressures stemming from declines in export demand, private investment and remittances. Emerging markets, too, are likely to face difficulty accessing private capital necessary to finance critical priorities, such as infrastructure.
The World Bank Group is well positioned to help respond to these challenges by maintaining or expanding trade lines, taking measures to maintain well-functioning domestic financial systems, and ensuring efficient, well-targeted social safety-net programs. And the role of the IFC (International Finance Corp.) may become especially critical in helping to unlock credit.
Across the globe, policymakers will be faced with difficult choices. As with the food price crisis, isolationism and protectionism will not offer a way out. Although we in the United States are taking many extraordinary measures to ease the crisis, we are not pursuing policies that that would limit the flows of goods, services or capital, as such measures which would only intensify the risks of a prolonged crisis.
The World Bank and IMF will have a vital role in working with governments to help craft appropriate responses and discouraging inward-looking policies, and we look to their leadership in this critical area.
