World Markets Simplified

 
Does this mean Equity markets will remain shut for companies for coming years??

Barring an extraordinary change in investor behavior in the largest emerging economies, the role of equities in the global financial system will likely be reduced in the coming decade. That's the central finding of The emerging equity gap: Growth and stability in the new investor landscape, a new report from the McKinsey Global Institute (MGI). As emerging-market households attain a level of income that enables them to purchase financial assets, they are becoming a powerful new investor class, whose choices will help determine global demand for different asset classes. The actions of these new investors will, in turn, shape how businesses obtain the capital they need to grow, how other investors around the world fare, and how stable and resilient economies will be.

The MGI study found that financial assets held by investors in developing nations have been growing at more than three times the rate of assets in developed nations, raising their share of global financial wealth from 7 percent to 21 percent over the past decade, or about $41.3 trillion. By the end of the current decade, investors in developing economies will hold as much as 36 percent of global financial wealth, or between $114 trillion and $141 trillion.

Emerging-market investors currently behave differently than those in mature economies. Investors in Europe, the United States, and wealthier parts of Asia, such as Hong Kong, hold 30 to 40 percent or more of their financial assets in equities, but the new investors of the emerging economies keep three-quarters of theirs in deposit accounts. While the use of equities in developing economies to finance growth and build savings is increasing, this evolution is taking place slowly. The likely result: a shift in the global allocation of financial assets toward deposits and fixed-income instruments and away from equities in this decade. This shift is being exacerbated by aging and other trends in the developed world that are dampening investor appetite for equities. As a result, equities could decline from 28 percent of global financial assets in 2010 to 22 percent in 2020.

What's behind the slow adoption of equity investing in developing markets? For an equity-investing culture to take root, there must be trusted, transparent markets with strong protections for small investors, as well as the institutions and systems to provide easy market access. Rules and regulations may be in place in emerging markets today, but enforcement is often unreliable. When the correct conditions are in place, investors are likely to gravitate to equities for higher returns.

In the meantime, even though total investor demand for equities will grow over the next decade, it will fall short of what corporations need by $12.3 trillion. This imbalance between the supply and demand for equity will be most pronounced in emerging economies, where companies need significant external financing for growth. In the United States and several other developed countries, investor demand for equities will exceed what companies will need, partly because many companies in mature economies generate sufficient profits to finance their growth. In Europe, however, allocations to equity are already falling, while the need for additional equity is rising for banks that must meet new capital requirements, making a significant equity gap likely.

The market will adjust to close this gap—but it will do so through a higher cost of equity to companies, which may prompt many firms to use less equity and more debt to fund growth. This will have ramifications for the global capital markets system, economies, and businesses alike.

 MGI_Emerging_equity_gap_Full_report.pdf

 
Global - Economy and Market
EU fails to agree on treaty change among 27 states: diplomats
The European Union failed to secure backing from all 27 countries to change the EU treaty at a summit on Friday, meaning any deal will now likely involve the 17 euro zone countries plus any others that want to join, three EU diplomats said.

China Nov inflation tumbles, more easing eyed
BEIJING - China's annual inflation rate tumbled in November to 4.2 percent, the lowest level in more than a year, fuelling expectations of further monetary policy easing to combat deteriorating domestic and international economic conditions.

U.S. firms build cash buffer to European crisis in Q3
WASHINGTON - U.S. companies sat on their largest pile of cash on record during the third quarter, providing a substantial buffer against any blow that might come from Europe's debt crisis, data from the Federal Reserve showed on Thursday.

States' revenues at pre-recession levels: study
WASHINGTON - Total tax revenues of U.S. states returned to pre-recession levels in the 2011 third quarter, a public policy institute reported on Thursday, but revenue growth slowed during the period, a worrisome trend for states concerned that economic clouds are gathering as they begin drafting their budgets for next year..

European recession could boost U.S. markets, experts say
A European recession would slow the global economic recovery, but it wouldn't be all bad for the U.S., said experts at the Wharton School of the University of Pennsylvania. Howard Pack, a professor of business and public policy, said U.S. stock markets could benefit as European investors shift their money to America.

ECB cool on more bond buying, lending to IMF
FRANKFURT - The European Central Bank doused hopes on Thursday it will ramp up its bond-buying program to fight the bloc's debt crisis, unnerving markets hours before a high-stakes EU summit they had hoped would produce a 'grand bargain' to end the turmoil.

Wholesale inventories rise 1.6 percent in October
WASHINGTON - Inventories at U.S. wholesalers rose more than expected in October, gaining the most in five months, while sales also rose.

Wall St falls on dashed euro-zone hopes, Germany's rejection
- Wall Street fell on Thursday after the European Central Bank dashed hopes that policy-makers were preparing a financial "bazooka" to contain the debt crisis, and Germany rejected some proposals to add power to the euro zone's bailout fund..

India - Economy and Market
Food inflation rate falls to near 3-1/2 yr low
NEW DELHI - India's annual food inflation eased to its lowest in nearly three-and-a-half years in late November, driven by a sharp fall in prices of vegetables and protein-rich food, bolstering the case for a pause in rates when the RBI reviews policy next week.Y

The primary articles price index was up 6.92%, compared with an annual rise of 7.74% in the prior week.

India's headline inflation has stayed above 9% for the 11th month in October, despite 13 rate increases by the central bank since March 2010.

India Inc fears populist measures and higher fiscal deficit as general elections approach

Businessmen have seen such harsh times before. The common buzzword across corridors of corporate India is to stay in cash and be cautious.

After FDI in retail, another jolt for govt in FDI in insurance
NEW DELHI: After the setback on FDI in retail, government was in for another jolt as a Parliamentary Committee has rejected its proposal for raising the foreign investment cap in insurance sector from 26 per cent to 49 per cent.

Apart from various aspects of the insurance bill, the Standing Committee on Finance also asked the government to bring an integrated modern banking law for India, instead of bringing piecemeal amendments.

Private equity investments spike up in November
In a complete contrast to the activity in October 2011, PE investment activity improved significantly during November 2011 with the highest number of deals this year. Real estate, hospitality and construction (RHC) sector received the highest value of investments - on the back of three large transactions during the month.

Technology News –

Facebook IPO sparks dreams of riches, adventure
(Reuters) - Traveling to space or embarking on an expedition to excavate lost Mayan ruins are normally the stuff of adventure novels.

But for employees of Facebook, these and other lavish dreams are moving closer to reality as the world's No. 1 online social network prepares for a blockbuster initial public offering that could create at least a thousand millionaires.

Analysis: Venture capital funding doubles for online retail
SAN FRANCISCO - Consumers spent a record $1.25 billion on Cyber Monday, according to comScore, highlighting how much people love shopping online.

Videocon plans to set up mobile phone facility by next year
Videocon plans to set up its first mobile phone manufacturing plant in India, which could entail an investment of up to Rs 75 crore in the initial phase.

Mini-laptop market to shrink by 40 mn in 2012
Tablet computers will eat into the miniature laptop market by 40 million units in 2012, the head of a Taiwanese research institute has said.

Microsoft opens global delivery centre in Bangalore
Software major Microsoft on Thursday opened a global delivery centre in this Indian tech hub for providing consulting and enterprise services to its clients worldwide.

IBM to buy DemandTec for $440 million
IBM says it is buying DemandTec, a price-management software company, for $440 million in cash to expand its commerce service offerings.

Will provide all support to IT sector: Mamata Banerjee
Mamata Banerjee called upon industrialists to generously invest in the IT sector in the state, saying her government was ready to provide all support.

 Daily_Markets_Eco_9Dec2011.doc

 

 

The $99 tablet computer called Novo7 could be thecheapest tablet computer coming up in the market. Earlier report said that MIPS Technologies just released their $99 tablet computer which was said to be the first Android 4.0 tablet in the world.

The Novo7 as it was called would be the first Ice Cream Sandwich tablet in the world that will bring more exciting user experience and the most amazingAndroid tablet as it was described by Ainovo.

The new $99 tablet computer was said to have an outstanding battery life, has a 7-inch, 800×480-pixel display, 1 GHz XBurst processor and will support Wi-Fi and 3G connectivity.

The new XBurst chip was said to be so power-efficient that it makes the Novo7 quick and responsive. It also gives games realistic graphic experience and it runs smoother. It uses Vivante GC860 GPU graphics core and support for OpenGL ES2.0 and ES1.0, OpenVG1.1 operating frequency 444MHz, according to Ainovo.

The new tablet computer has a front camera and 2.0 megapixel back camera with amazing video experience. Below is the video explaining the full features and specifications of Novo7.

 
Global - Economy and Market
Unemployment falls in most U.S. metro areas
Unemployment in October was down in 281 U.S. metropolitan areas, the Labor Department said. The number was the largest since April. The Conference Board's index of hiring prospects in the U.S. rose to 103.7 last month, from 102.4 in October. It was the highest reading in three years.

Many companies pay no state taxes: report
WASHINGTON - Many brand-name U.S. companies are using deductions, credits and other means to shave their state tax rates below zero percent, a study by a left-leaning think tank released on Wednesday found.

ECB to cut rates as focus on bond buys intensifies
FRANKFURT - The ECB is expected to cut rates and unveil a new package of bank aid on Thursday, with markets also watching for any hint it will intensify its bond buying support for the bloc's struggling periphery, setting the stage for a critical euro zone summit.

Fed to hold off on easing, finalize policy framework
WASHINGTON - The Federal Reserve looks set to hold off on easing monetary policy for a second meeting in a row as it gauges the impact of Europe's crisis on the U.S. economy and ponders additional transparency steps.

October consumer credit up for 2nd straight month
WASHINGTON - Consumer credit in October grew sharply for the second straight month, rising $7.65 billion after increasing a revised $6.88 billion in September, a Federal Reserve report showed on Wednesday.

India - Economy and Market
· India's Oct industrial output shrank by 7%
India's industrial output declined by 7% in October, dragged down by a fall in the capital goods sector, the first time it moved into negative territory since June 2009, The Times of India reported on Thursday, quoting an unnamed source.

"Initial estimates show that industrial production has shrunk by 7%. But with more data coming in, the decline may be around 5%," the newspaper quoted the source as saying.

· RBI unlikely to cut CRR on inflation woes: Gokarn
Reserve bank governor Subir Gokarn hinted that the RBI may not cut the cash reserve ratio since inflationary pressures are still high. Gokarn was speaking at a closed door meeting with bankers.

· Subsidy bill may go up by Rs 1 lakh cr in FY'12: Pranab
The government subsidy bill in the current fiscal is likely to go up by a massive Rs 1 lakh crore on account of higher outlays towards fertiliser, food and oil, Finance Minister Pranab Mukherjee said today.

· RBI guidelines on MFI sector a positive: CRISIL
"RBI's revision in provisioning norms and change in recognition of non-performing assets (to 90 days overdue from 180 days overdue) is unlikely to impact the profitability of the non-Andhra operations of Crisil-rated MFIs over the medium term," Crisil said in a study on the sector.

RBI's recent guidelines have created a new category of non-banking financial companies (NBFCs) called NBFC-MFIs. The guidelines also highlight the need for transparency in interest rates, and address issues on multiple lending and coercive recovery.

· CCEA clears Rs 6,500 cr FDI proposals of two power entities
PTI 7 Dec 2011, 22:36
Govt approved the proposals of two power sector entities for bringing in foreign direct investment worth Rs 6,500 crore.

· FDI in retail: Govt approves Rs 8,750-cr financial package for West Bengal
NEW DELHI: After heeding to West Bengal Chief Minister Mamata Banerjee's demand on FDI in retail, the Centre today gifted her with a special package of Rs 8,750 crore for development of backward region of the state.

The proposal of the Planning Commission, which was being sought by Banerjee for long, was cleared by the Union Cabinet this evening.

· Govt apprehensive about decontrol of urea fertiliser: Jena
Govt expressed apprehensions over freeing of urea sector saying that retail prices of decontrolled fertilisers have sharply risen.

· Salt export may see uptrend this season
Export orders are expected to increase with demand coming from China and South Asian countries.

· Nepal to allow car imports from India by authorised manufacturers
Nepal would end discrimination against car imports from the country and allow imports on the basis of self-certification by Indian government.

Technology News –
· Tech firms iGate Patni, MindTree may hire less and reduce pay hikes; attrition to come down
While companies say the double-digit wage inflation seen in 2011 will continue, consultancy firm Mercer expects wage hikes to be moderate.

· Cognizant to develop online applications for Telefonica UK
Cognizant said it has been roped in by communications firm Telefonica UK to develop and manage the company's online applications.

· Wipro to invest about Rs 800 cr in West Bengal; would create 15,000 jobs
Premji also proposed a public-private partnership with the state government for providing e-services towards ensuring e-governance.

· HCL Infosystems bags order for border check posts in Maharashtra
HCL Infosystems has bagged a project to implement automation, computerisation and integration solutions.

· Google India gets Income-Tax Dept notice for not revealing correct revenues
MUMBAI: Around the same time Telecom Minister Kapil Sibal was planning to pull up Google, the Income-Tax Department was giving the final touches to a tax demand on the Indian arm of the global search engine company.

· Google India Pvt Ltd, according to the tax office, has not offered its entire income for taxation and the profit and loss account filed by the company "does not give complete picture of the businesses".

· Aadhaar numbers to be delivered electronically to clear backlog
The government on Wednesday said there is some backlog in delivering 'Aadhaar' unique identity cards and steps have been taken.

· Heineken links with Facebook in digital drive
LONDON - Brewing giant Heineken is linking with social networking website Facebook to boost its global digital marketing, with the first fruits of the partnership being an online campaign aimed at making responsible drinking cool.

· California proposes rules to spur clean car growth
REUTERS - California's powerful air quality regulator on Wednesday proposed sweeping new rules to reduce greenhouse gas emissions from vehicles, including putting 1.4 million electric, plug-in and hydrogen cars on the state's roads by 2025.

· Olympus board signals to quit, battle looms with ex-CEO
TOKYO - Olympus Corp's board signalled plans to quit over a $1.7 billion accounting fraud, but will likely pick a team of potential successors, triggering a battle for control of the Japanese firm with the former CEO who blew the whistle on the scandal.

· Samsung's Nov TV sales hit record, confident of meeting 2011 target
SEOUL - Samsung Electronics Co , the world's top TV brand, said on Thursday its television sales hit a record 5.7 million units in November, helped by strong U.S. sales during the long Thanksgiving weekend.

· Govt may auction surrendered BSNL broadband spectrum
NEW DELHI - The government has "in principle" accepted a proposal from state-run Bharat Sanchar Nigam Ltd to surrender wireless broadband spectrum in several telecoms zones and will look at auctioning it to other players, the telecoms secretary said.

· RIM forced to change name of software
BlackBerry-maker Research In Motion has been forced to change the name of its new operating system from BBX after the company lost a trademark ruling.

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 Daily_Markets_Eco_8Dec2011.doc