In my last blog, I had discussed recently concluded quarter results about various firms like Goldman Sachs, JPMorgan Chase, Microsoft, Amazon. Looking at the current economic outlook and the way the organizations are slashing their payroll to remain in profit, one question comes to everyone's mind "Do the quarterly results of the firms represent the economy outlook?"
Goldman Sachs declared record quarterly profits in their history surpassing analyst expectations, while Microsoft and Amazon could not meet analyst expectations to reach their targets. We can consider sentiment plays an important part when DOW-JONES tumbled upto 6600 in Mar'06 in response to continuous failure of banks in US and most of the retailer's same stores sales were plummeting. Since March '09, DOW has recovered upto 9200 in July 31st, increased ~40% and it shows the optimism across the board rather than an economic outlook. There are not much changes to the economy since March '09, as Unemployment has increased from ~8.5% to ~9.7% from Mar '09 till Jul '09, 57 more banks have filed Chapter 11 bankruptcy since Jan '09, industries are still cutting payrolls, job cuts were 467,000 in Jun '09, 322,000 in May '09.
Results of the banks are showing optimism in the economy as there is positive sentiment in the economy for signs of stabilization, but they do not provide the exact picture of the economy. Rather firms whose profits are directly related to the consumer spending such as Discount Retailers e.g. Walmart, Sears, Electronic retailers like RadioShack, BestBuy, J&R, online retailers e.g. Amazon, OfficeDepot and most of the retailing firms' results are not showing any improvement even though they are cutting their payroll to remain in profit. And till the time unemployment is rising, and there wont be any positive signs on people's spending there can't be any growth to the economy.
Obama led government is putting their every effort to increase consumer spending and provide employment by increasing construction, bridge, roads related contractual works. But DOW's 2600 points jump from Mar '09 till Jul '09 does give breath to consumers till the time teh industries feel confident about the economy and again start hiring.
So we can say economy is stabilizing and it will take 9/12 months before it shows good signs of improvement.
-Amit
Sunday, August 2, 2009
Saturday, August 1, 2009
Kutch/Gujarat an ideal investment destination in India
Kutch is a growing economic and industrial hub in one of India's fastest growing states,Gujarat and it is becoming an ideal investment destination for big investors and big business houses in India. As a nature Kutch-Gujarat is almost dead agricultural region where the average annual rain is 250mm and most its land is covered with sand. But since 2001's earthquake epi-center in Kutch region and Gujarat's Chief Minister Mr. Naredra Modi's ideal thoughts to grow industries in the region has attracted investors from all around the world. Government declared tax incentives upto 15 years.
Kutch's Kandla port is considered the most busy port in India after Mumbai's Jawaharlal Nehru port and has attracted lots businesses related to transportation and import/export in the region since decades. And since Mr. Narendra Modi's ideal sight of converting an idle region into a business destination, land prices increased more than 10/15 times in a span of 7 years(this depends on location and growth oriented areas). And due to large tax incentives and government's 'Vibrant Gujarat' initiatives it attracted Rs.12,000,000 Crore worth of MOUs in 2009's event to invest in businesses. Apart from Kandla port, Mundra port is developed by Adani Industries whose businesses range from pickel export, power/coal trading, natural gas trading, power and import/export.
The industries who are investing includes World leader in Wall Clock Manufacturing Ajanta group's CFL plant, Nissan Motors manufacturing plant that will export the assembled Nissan motors to Europe region and host of businesses(including Welspun group in Anjar, JayPee group, Jindal group and couple of windmill farms) who wants to take advantage of the tax incentives and its ideal destination for import/export market. Sanghi industries is having India's biggest cement plant at a single location and currently expanding.
Kutch is mineral rich region with very large reserve of Lignite, Gypsum and lot of other mineral. GMDC(Gujarat Mineral Development Corp) and lot of Cement industries are dependent on this materials are expanding their wings in the mineral rich region.
In all, Kutch's ideal location and geographical benefits would help it attract lots of manufacturing businesses and help to provide more synergies to export-focused businesses.
View invited from readers.
Amit
Kutch's Kandla port is considered the most busy port in India after Mumbai's Jawaharlal Nehru port and has attracted lots businesses related to transportation and import/export in the region since decades. And since Mr. Narendra Modi's ideal sight of converting an idle region into a business destination, land prices increased more than 10/15 times in a span of 7 years(this depends on location and growth oriented areas). And due to large tax incentives and government's 'Vibrant Gujarat' initiatives it attracted Rs.12,000,000 Crore worth of MOUs in 2009's event to invest in businesses. Apart from Kandla port, Mundra port is developed by Adani Industries whose businesses range from pickel export, power/coal trading, natural gas trading, power and import/export.
The industries who are investing includes World leader in Wall Clock Manufacturing Ajanta group's CFL plant, Nissan Motors manufacturing plant that will export the assembled Nissan motors to Europe region and host of businesses(including Welspun group in Anjar, JayPee group, Jindal group and couple of windmill farms) who wants to take advantage of the tax incentives and its ideal destination for import/export market. Sanghi industries is having India's biggest cement plant at a single location and currently expanding.
Kutch is mineral rich region with very large reserve of Lignite, Gypsum and lot of other mineral. GMDC(Gujarat Mineral Development Corp) and lot of Cement industries are dependent on this materials are expanding their wings in the mineral rich region.
In all, Kutch's ideal location and geographical benefits would help it attract lots of manufacturing businesses and help to provide more synergies to export-focused businesses.
View invited from readers.
Amit
Sunday, July 26, 2009
US Economy Review. 07/26/2009
Goldman Sachs(GS) reported their earning $4.93 far ahead than estimated $3.53. Their Equities and FICC generated revenues $3.18B and $6.8B respectively amid a better stage set in trading environments. Following GS, JPMorgan Chase which bought Bear Sterns and Washington Mutual(WaMu) reported good results and these events helped DOW to climb 937.14 points from 8157.10 to 9093.24 in a matter of 10 business days. Is the US economy on its track to rebound?
No doubt the economy is showing signs of stabilizing and DOW has recovered from 6600 points in Mar'09 to 9100 in Jul'09 and many of the banks have returned their share of Stimulus money back to the government, but still Obama led government is concerned about how to get the economy on track, generate more employment, keep unemployment as below as possible and get back the consumer spending. US' peer Spain is facing 17.7% unemployment and it could go upto 22-24% by mid next year if the industries will keep on slashing jobs at the same rate and economy does not show any signs of improvement.A bloomberg article shows how bad situation is there in Spain and it has ~30% unemployment population among euro region. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOBGPyetNGIg.
Obama led administration is putting every effort to fix the economy related issues, but still the economy is not showing any signs of growth as the unemployment is around 10% and none of the industries are showing any signs of hiring, putting pressure on government on how to tackle the problems the economy is facing, whether one more stimulus required to boost the consumer spending? Since consumer spending is core to get the economy on track. But current results from Microsoft and Amazon are showing dizziness how much time it will take to get on track, how the consumer spending and the companies are cutting their expenses. MS missed its revenue and net profit projections and for the first time since going public and it reported negative revenue growth. The same way Amazon missed its revenue and net profit projections even though their Kindle 2 was a big success in digital e-Book market surpassing Kindle 1 sales. And couple of companies declared their negative results amid less consumer spending indicates recession might prolong.
World leaders at the currently concluded G20 summit are concerned about how the get back the consumer spending and generate more number of jobs, and world reserve currency as USDollar is showing its weakness and most of countries who have their foreign exchange in US Dollar are seeing their values plummeting.
So seeing a rosier picture for couple of days in DOW, we can expect the market to correct to some extent and till the economy is not showing firm signs it would trade range bound 8500-9000 points.
I will keep on posting market views as and when getting some time.
No doubt the economy is showing signs of stabilizing and DOW has recovered from 6600 points in Mar'09 to 9100 in Jul'09 and many of the banks have returned their share of Stimulus money back to the government, but still Obama led government is concerned about how to get the economy on track, generate more employment, keep unemployment as below as possible and get back the consumer spending. US' peer Spain is facing 17.7% unemployment and it could go upto 22-24% by mid next year if the industries will keep on slashing jobs at the same rate and economy does not show any signs of improvement.A bloomberg article shows how bad situation is there in Spain and it has ~30% unemployment population among euro region. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOBGPyetNGIg.
Obama led administration is putting every effort to fix the economy related issues, but still the economy is not showing any signs of growth as the unemployment is around 10% and none of the industries are showing any signs of hiring, putting pressure on government on how to tackle the problems the economy is facing, whether one more stimulus required to boost the consumer spending? Since consumer spending is core to get the economy on track. But current results from Microsoft and Amazon are showing dizziness how much time it will take to get on track, how the consumer spending and the companies are cutting their expenses. MS missed its revenue and net profit projections and for the first time since going public and it reported negative revenue growth. The same way Amazon missed its revenue and net profit projections even though their Kindle 2 was a big success in digital e-Book market surpassing Kindle 1 sales. And couple of companies declared their negative results amid less consumer spending indicates recession might prolong.
World leaders at the currently concluded G20 summit are concerned about how the get back the consumer spending and generate more number of jobs, and world reserve currency as USDollar is showing its weakness and most of countries who have their foreign exchange in US Dollar are seeing their values plummeting.
So seeing a rosier picture for couple of days in DOW, we can expect the market to correct to some extent and till the economy is not showing firm signs it would trade range bound 8500-9000 points.
I will keep on posting market views as and when getting some time.
Wednesday, September 5, 2007
India remains world's favourite outsourcing destination
When it comes to outsourcing, India continues to rule as the favourite global destination, even though factors like emergence of cheaper destinations, employee and salary crunch are adversely affecting the sector, a recent study shows.
India holds an edge as it commands global confidence to produce perfect Turn Around Time (TAT), a recent study by recruitment solutions provider Elixier Solutions shows.
TAT is the time needed for performing a task, especially receiving, completing, and returning an assignment.
"At present outsourcing business in India is increasing at a rate four times more than any other country and the county has the resource and margin to meet the competition," a partner in Elixier Solutions Vipul Prakash said.
According to the study, growing at a rate of 40 per cent annually, India is the lead player in this sector followed by China at the second spot with a growth rate of 25 per cent.
"Certain companies restrain from outsourcing their practices thinking it to be a luxury practice which only organisations having deep pockets can afford," Elixir Web Solutions Associate Partner Jacob Samuel said.
The overall outlook of this industry seems positive with experts predicting that the global market for shared services would grow to 1.43 trillion dollar by the end of 2009 from 1,000 billion dollar at present.
Although India and China are the market leaders in this sector, there are huge opportunities present in the market to give ample space to other countries like Philippines, Vietnam, Romania, Kenya, Sri Lanka and North America market to grow, the report said.
The study also said although it is unlikely that India would be able to retain its number one slot with China aggressively trying to outstrip it in the business, it would still be able to get a decent share of the pie.
Also, processes like human resource, insurance, life sciences, finance, legal services, technical support, risk management, supply chain and media would come up in a big way in terms of business and employment opportunities, the study added.
India holds an edge as it commands global confidence to produce perfect Turn Around Time (TAT), a recent study by recruitment solutions provider Elixier Solutions shows.
TAT is the time needed for performing a task, especially receiving, completing, and returning an assignment.
"At present outsourcing business in India is increasing at a rate four times more than any other country and the county has the resource and margin to meet the competition," a partner in Elixier Solutions Vipul Prakash said.
According to the study, growing at a rate of 40 per cent annually, India is the lead player in this sector followed by China at the second spot with a growth rate of 25 per cent.
"Certain companies restrain from outsourcing their practices thinking it to be a luxury practice which only organisations having deep pockets can afford," Elixir Web Solutions Associate Partner Jacob Samuel said.
The overall outlook of this industry seems positive with experts predicting that the global market for shared services would grow to 1.43 trillion dollar by the end of 2009 from 1,000 billion dollar at present.
Although India and China are the market leaders in this sector, there are huge opportunities present in the market to give ample space to other countries like Philippines, Vietnam, Romania, Kenya, Sri Lanka and North America market to grow, the report said.
The study also said although it is unlikely that India would be able to retain its number one slot with China aggressively trying to outstrip it in the business, it would still be able to get a decent share of the pie.
Also, processes like human resource, insurance, life sciences, finance, legal services, technical support, risk management, supply chain and media would come up in a big way in terms of business and employment opportunities, the study added.
Sunday, August 26, 2007
India to top in venture capital investments: Study
The supremacy of western economies in the venture capital investment space is facing challenges from emerging economies with India expected to overtake global leader UK by 2009 if the current trend persists, a latest UBS-sponsored report said.
As per data analysed by the 'UBS UK Venture Backed Report - 2007' western leadership in innovation is being increasingly threatened by emerging economies like India and China.
According to the report, "India's VC market with a growth rate of approximately 90 per cent is likely to overtake the UK by 2009."
The Chinese VC market has already surpassed UK in terms of absolute size in 2006 and is growing at a much faster pace.
If the current growth rate persists, China's VC market would overtake the European market as a whole within two to three years. India would follow suit in the next four years, said the UBS sponsored report by Library House titled 'Funding Growth in a Changing World'.
The prime factor behind this stupendous growth by the emerging economies is that these countries have carved out a niche for themselves in the field of innovation as VC funds are utilised to support new ideas.
Venture capital forms a major component of a country's ability to innovate. The US is the acknowledged leader in technological innovation, while India and China pose an increasing challenge to the western economies.
India and China are at the cutting edge of innovation and strongly accelerating against the sluggish growth in Europe and the US, the report added.
The report says policy makers in the UK, Europe and the US must focus on how to maintain their lead in innovation amid the high competition. It cautioned that the rise of China and India should not be seen as a threat' to the West and vice-a-versa.
The reason being that for economic growth the utilisation of innovative products and services are perceived to be more important than their generation, analysts said.
"The consumption of innovation by an economy is just as important, as the generation of that innovation. UK companies need to become more willing to procure from innovative, but inexperienced, young companies," Professor of Business at Columbia University Amar Bhide said.
The global VC market has risen in recent years. Over 1.4 billion pounds of institutional capital was invested during 2006 through 556 deals in UK. The venture capital investments in 2006 shows a 27 per cent hike compared to 1.1 billion pound that was raised through 539 deals in 2005.
UK is the leader in Europe for VC but it still lags significantly behind the US in terms of absolute size.
As per data analysed by the 'UBS UK Venture Backed Report - 2007' western leadership in innovation is being increasingly threatened by emerging economies like India and China.
According to the report, "India's VC market with a growth rate of approximately 90 per cent is likely to overtake the UK by 2009."
The Chinese VC market has already surpassed UK in terms of absolute size in 2006 and is growing at a much faster pace.
If the current growth rate persists, China's VC market would overtake the European market as a whole within two to three years. India would follow suit in the next four years, said the UBS sponsored report by Library House titled 'Funding Growth in a Changing World'.
The prime factor behind this stupendous growth by the emerging economies is that these countries have carved out a niche for themselves in the field of innovation as VC funds are utilised to support new ideas.
Venture capital forms a major component of a country's ability to innovate. The US is the acknowledged leader in technological innovation, while India and China pose an increasing challenge to the western economies.
India and China are at the cutting edge of innovation and strongly accelerating against the sluggish growth in Europe and the US, the report added.
The report says policy makers in the UK, Europe and the US must focus on how to maintain their lead in innovation amid the high competition. It cautioned that the rise of China and India should not be seen as a threat' to the West and vice-a-versa.
The reason being that for economic growth the utilisation of innovative products and services are perceived to be more important than their generation, analysts said.
"The consumption of innovation by an economy is just as important, as the generation of that innovation. UK companies need to become more willing to procure from innovative, but inexperienced, young companies," Professor of Business at Columbia University Amar Bhide said.
The global VC market has risen in recent years. Over 1.4 billion pounds of institutional capital was invested during 2006 through 556 deals in UK. The venture capital investments in 2006 shows a 27 per cent hike compared to 1.1 billion pound that was raised through 539 deals in 2005.
UK is the leader in Europe for VC but it still lags significantly behind the US in terms of absolute size.
Sunday, August 19, 2007
Gujarat rules road to industrialisation: RBI
Gujarat has edged out Maharashtra to become India's top state in terms of investment commitments during 2006-07, cornering over 25 per cent of the total spending proposed by corporates across the country.
Gujarat received investment proposals to the tune of Rs 74,988 crore in 86 projects, while Andhra Pradesh was at a distant second with investment intentions worth Rs 25,173 crore, Maharashtra Rs 24,330 crore and Tamil Nadu Rs 24,229 crore, the Reserve Banks said in an analysis of 'Corporate Investment: Growth in 2006-07 and prospects for 2007-08.'
Gujarat, which is slated to go for elections some time in November, has displaced Maharashtra from the top slot attracting one-fourth of the total investment intentions in 1,054 projects aggregating Rs 2,83,440 crore.
Corporates invested Rs 1,31,299 crore in 812 crore during the previous year 2005-06.
Total investments during 2007-08, after taking into account the capital expenditure, ECBs etc, are likely to aggregate to Rs 2,06,460 crore, RBI said, adding the turnaround in corporate investment, which began in 2002-03 and peaked in 2004-05, is expected to be sustained in 2007-08.
During 2006-07, Maharashtra, in terms of investments, was relegated to the third place after Andhra Pradesh which attracted 8.9 per cent (Rs 25,173 crore) of the total corporate investments.
Maharashtra shared the third slot with Tamil Nadu attracting 8.6 per cent of total investments.
Gujarat received investment proposals to the tune of Rs 74,988 crore in 86 projects, while Andhra Pradesh was at a distant second with investment intentions worth Rs 25,173 crore, Maharashtra Rs 24,330 crore and Tamil Nadu Rs 24,229 crore, the Reserve Banks said in an analysis of 'Corporate Investment: Growth in 2006-07 and prospects for 2007-08.'
Gujarat, which is slated to go for elections some time in November, has displaced Maharashtra from the top slot attracting one-fourth of the total investment intentions in 1,054 projects aggregating Rs 2,83,440 crore.
Corporates invested Rs 1,31,299 crore in 812 crore during the previous year 2005-06.
Total investments during 2007-08, after taking into account the capital expenditure, ECBs etc, are likely to aggregate to Rs 2,06,460 crore, RBI said, adding the turnaround in corporate investment, which began in 2002-03 and peaked in 2004-05, is expected to be sustained in 2007-08.
During 2006-07, Maharashtra, in terms of investments, was relegated to the third place after Andhra Pradesh which attracted 8.9 per cent (Rs 25,173 crore) of the total corporate investments.
Maharashtra shared the third slot with Tamil Nadu attracting 8.6 per cent of total investments.
Saturday, August 18, 2007
China set to replace US as world's No 2 exporter
China is all set to overtake the United States as the world's second-largest exporter this year, and may well top Germany as the world's leading exporter next year, Xinhua news agency quoted vice minister of commerce Yu Guangzhou as saying.
China currently ranks third in export volume after Germany and the United States.
Beijing could overtake the US by the year-end if current trade trends continue, Guangzhou told the China Economic Development Forum.
Last year, China's export volume trailed US exports by less than $70 billion, while the pace of export growth was 7 percentage points faster than that of the US. If that growth continues, China's exports could exceed US exports by $50 billion this year, Yu said.
Chinese customs statistics show that the country's foreign trade volume reached $980.9 billion in January-June, up 23.3 per cent from the same period a year ago. Of this, exports grew 27.6 per cent to $546.7 billion, and imports grew 18.2 per cent to $434.2 billion.
Meanwhile, China's quality watchdog has warned that the country's failure to improve the quality of some of its exported goods was undermining its trade strength.
"We may have entered the ranks of the big traders, but we're still far, far from being a strong trade power, and the fundamental reason is that our product quality competitiveness is not strong," the People's Daily quoted Li Changjiang, head of the General Administration for Quality Supervision and Quarantine, as saying.
Concern over potentially tainted products made in China has resulted in recalls or bans on such goods - from Chinese toothpaste to toys and pet food. (See: Recall of Chinese toys has lead to factory closures: China Toy Association)
His comments were reported a day after China said it would send officials to the United States this month and next to cool worries stemming from a series of scandals over tainted exports, from toothpaste to pet food and toys containing lead paint.
"Quality is a symbol of national strength," Li said. He also called for tougher regulation of manufacturers and exporters.
China currently ranks third in export volume after Germany and the United States.
Beijing could overtake the US by the year-end if current trade trends continue, Guangzhou told the China Economic Development Forum.
Last year, China's export volume trailed US exports by less than $70 billion, while the pace of export growth was 7 percentage points faster than that of the US. If that growth continues, China's exports could exceed US exports by $50 billion this year, Yu said.
Chinese customs statistics show that the country's foreign trade volume reached $980.9 billion in January-June, up 23.3 per cent from the same period a year ago. Of this, exports grew 27.6 per cent to $546.7 billion, and imports grew 18.2 per cent to $434.2 billion.
Meanwhile, China's quality watchdog has warned that the country's failure to improve the quality of some of its exported goods was undermining its trade strength.
"We may have entered the ranks of the big traders, but we're still far, far from being a strong trade power, and the fundamental reason is that our product quality competitiveness is not strong," the People's Daily quoted Li Changjiang, head of the General Administration for Quality Supervision and Quarantine, as saying.
Concern over potentially tainted products made in China has resulted in recalls or bans on such goods - from Chinese toothpaste to toys and pet food. (See: Recall of Chinese toys has lead to factory closures: China Toy Association)
His comments were reported a day after China said it would send officials to the United States this month and next to cool worries stemming from a series of scandals over tainted exports, from toothpaste to pet food and toys containing lead paint.
"Quality is a symbol of national strength," Li said. He also called for tougher regulation of manufacturers and exporters.
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