India is likely to allow foreign individuals to invest in mutual funds in the next two weeks but with a cumulative cap of USD 10 billion, an official said today. The detailed guidelines are being worked out jointly by the finance ministry, RBI and Sebi. These will be notified by the capital market regulator, the Finance Ministry official said.
The move follows announcement in the last Budget by Finance Minister Pranab Mukherjee .
It was aimed at broad-basing the flow of foreign investment in the Indian stock market, so that dependence on FIIs' funds, considered as hot money, is reduced.
"This will increase corpus in MF holdings, which means MFs will purchase more equity and other schemes as a result of which it will help in fighting volatility, which takes place due to FII outflows," a Finance Ministry official told PTI.
At present, only FIIs and sub-accounts registered with the market regulator Sebi and NRIs are allowed to invest in mutual fund schemes in the country.
"Discussions between government, RBI and Sebi are in final stages and market regulator's guidelines in this regard are expected in two-three weeks," the official said.
The proposed move would not only help in attracting more foreign funds but is also expected to bring in 'more depth' in the fast-growing domestic mutual funds industry.
Earlier Mukherjee in his Budget speech had said: "To liberalise the portfolio investment route, it has been decided to permit Sebi-registered mutual funds to accept subscriptions from foreign investors who meet KYC requirements for equity schemes".
The official said there is a "broad consensus" that investments by foreign individuals should be limited up to USD 10 billion.
For allowing foreigners in the segments, the government is looking to introduce a completely new class of investors, called Qualified Foreign Investors (QFIs).
QFIs registered with depository participants can invest in the mutual funds directly and also through a mechanism — Unit Confirmation Receipt (UCR) system — sources said.
Under the proposed UCR approach, a foreign investor can go to depositories in his home country and place orders on custodian banks in India. The custodian banks will look into the MFs and issue UCRs against the underlying MFs.
The fund houses, however, will have to comply with know-your-customer (KYC) norms before seeking investment from overseas investors.
The average assets managed by the MF industry, consisting of 40 players, stood at Rs 7,00,538 crore as of March 31, 2011.
Attached please find the quarterly update released by CRISIL Equity Research.
CRISIL IER reports provide a Fundamental Grading and a Valuation Grading of a company, presented in the form of a proprietary CRISIL Fundamental and Valuation (CFV) matrix. The Fundamental Grading is based on an analysis of the business and industry prospects, financial performance and outlook, management quality and corporate governance of a company vis-Ã -vis other listed companies in India. The Valuation Grading provides current assessment of the fair value of the company's stock.
1 of 1 File(s)
MSP Steel and Power Ltd - Quarterly update Q4FY11
Fundamental Grade : 2/5
Valuation Grade : 5/5
Fair Value : Rs 75
CMP : Rs 45
For detailed downloads of CRISIL's Independence Equity Research (IER) reports (Initiation + Quarterly), visit www.ier.co.in
CRISIL Fundamental Grade | Assessment |
5/5 | Excellent fundamentals |
4/5 | Superior fundamentals |
3/5 | Good fundamentals |
2/5 | Moderate fundamentals |
1/5 | Poor fundamentals |
CRISIL Valuation Grade | Assessment |
5/5 | Strong upside (>25% from CMP) |
4/5 | Upside ( 10-25% from CMP |
3/5 | Align ( +-10% from CMP |
2/5 | Downside (negative 10-25% from CMP) |
1/5 | Strong downside (<-25%from CMP) |
CRISIL IER reports provide a Fundamental Grading and a Valuation Grading of a company, presented in the form of a proprietary CRISIL Fundamental and Valuation (CFV) matrix. The Fundamental Grading is based on an analysis of the business and industry prospects, financial performance and outlook, management quality and corporate governance of a company vis-Ã -vis other listed companies in India. The Valuation Grading provides current assessment of the fair value of the company's stock.
1 of 1 File(s)
Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precursor of surprising failure? The answer is: yes.
Japan's gross domestic product per head (at purchasing power parity) jumped from a fifth of US levels in 1950 to 90 per cent in 1990. But this spectacular convergence went into reverse: by 2010, Japan's GDP per head had fallen to 76 per cent of US levels. China's GDP per head jumped from 3 per cent of US levels in 1978, when Deng Xiaoping's "reform and opening up" began, to a fifth of US levels today. Is this going to continue as spectacularly over the next few decades or could China, too, surprise on the downside?
It is easy to make the optimistic case. First, China has a proved record of success, with an average rate of economic growth of 10 per cent between 1979 and 2010. Second, China is a long way from the living standards of the high-income countries. Relative to the US, its GDP per head is where Japan's was in 1950, before a quarter century of further rapid growth. If China matched Japan's performance, its GDP per head would be 70 per cent of US levels by 2035 and its economy would be bigger than those of the US and European Union, combined.
Yet counter-arguments do exist. One is that China's size is a disadvantage: in particular, it makes its rise far more dramatic for the demand for resources than anything that has gone before. Another is that the political effects of such a transformation might be disruptive for a country run by a Communist party. It is also possible, however, to advance purely economic arguments for the idea that growth might slow more abruptly than most assume.
Such arguments rest on two features of China's situation. The first is that it is a middle-income country. Economists increasingly recognise a "middle-income trap". Thus, sustaining rapid increases in productivity and managing huge structural shifts as the economy becomes more sophisticated is hard. Japan, South Korea, Taiwan, Hong Kong and Singapore are almost the only economies to have managed this feat over the past 60 years.
Happily, China has close cultural and economic similarities with these east Asian successes. Unhappily, China shares with these economies a model of investment-led growth that is both a strength and a weakness. Moreover, China's version of this model is extreme. For this reason, it is arguable that the model will cause difficulties even before it did in the arguably less distorted case of Japan.
Premier Wen Jiabao has himself described the economy as "unstable, unbalanced, unco-ordinated and ultimately unsustainable". The nature of the challenge was made evident to me during discussions of the 12th five year plan at the China Development Forum 2011 in Beijing in March. This new plan calls for a sharp change in the pace and structure of economic growth. In particular, growth is forecast to decline to just 7 per cent a year. More important, the economy is expected to rebalance from investment, towards consumption and, partly as a result, from manufacturing towards services.
The question is whether these shifts can be managed smoothly. Michael Pettis of Peking University's Guanghua School of Management has argued that they cannot be. His argument rests on the view that in the investment-led growth model, repression of household incomes plays a central role by subsidising that investment. Removing that repression – a necessary condition for faster growth of consumption – risks causing a sharp slowdown in output and a still bigger slowdown in investment. Growth is driven as much by subsidised expansion of capacity as by the profitable matching of supply to final demand. This will end with a bump.
Investment has indeed grown far faster than GDP. From 2000 to 2010, growth of gross fixed investment averaged 13.3 per cent, while growth of private consumption averaged 7.8 per cent. Over the same period the share of private consumption in GDP collapsed from 46 per cent to a mere 34 per cent, while the share of fixed investment rose from 34 per cent to 46 per cent. (See charts.)
Professor Pettis argues that suppression of wages, huge expansions of cheap credit and a repressed exchange rate were all ways of transferring incomes from households to business and so from consumption to investment. Dwight Perkins of Harvard argued at the China Development Forum that the "incremental capital output ratio" – the amount of capital needed for an extra unit of GDP – rose from 3.7 to one in the 1990s to 4.25 to one in the 2000s. This also suggests that returns have been falling at the margin.
If this pattern of growth is to reverse, as the government wishes, the growth of investment must fall well below that of GDP. This is what happened in Japan in the 1990s, with dire results. The thesis advanced by Prof Pettis is that a forced investment strategy will normally end with such a bump. The question is when. In China, it might be earlier in the growth process than in Japan because investment is so high. Much of the investment now undertaken would be unprofitable without the artificial support provided, he argues. One indicator, he suggests, is rapid growth of credit. George Magnus of UBS also noted in the FT of May 3 2011 that the credit-intensity of Chinese growth has increased sharply. This, too, is reminiscent of Japan as late as the 1980s, when the attempt to sustain growth in investment-led domestic demand led to a ruinous credit expansion.
As growth slows, the demand for investment is sure to shrink. At growth of 7 per cent, the needed rate of investment could fall by up to 15 per cent of GDP. But the attempt to shift income to households could force a yet bigger decline. From being an growth engine, investment could become a source of stagnation.
The optimistic view is that China's growth potential is so great that it can manage the planned transition with ease. The pessimistic view is that it is hard for a country investing half of GDP to decelerate smoothly. I expect the transition to slower economic growth and greater reliance on consumption to be quite bumpy. The Chinese government is skilled. But it cannot walk on water. The water it is going to have to walk on over the next decade is going to be choppy. Watch out for the waves.
The Comptroller and Auditor General (CAG) of India has come down hard on Mukesh Ambani-controlled Reliance Industries Limited (RIL), suggesting the company grossly overstated its development costs in India's largest gas field, possibly causing "significant" financial losses to the exchequer.The first audit report of the independent government auditor that followed allegations of "gold-plating" of costs while developing the KG-D6 field in Andhra Pradesh probed RIL, Cairn India, BG (the former British Gas) and others, but the Ambani firm gets the main attention.
As the production-sharing contract involves profit-sharing with the government, a higher capital expenditure results in the profit being lower for the government than it would be otherwise, which the CAG has explained in its 200-page June 7 report to the petroleum ministry.
The report is a draft. The final version will be placed in Parliament after comments from the ministry
Several attempts by email and phone to get RIL's response on the CAG report on exploration work in the 2003-2008 period did not elicit any comment from the company's senior executives until the time of going to press on Sunday.
The CAG report has revealed severe irregularities and violations on part of private operators and government departments and ministries.
The report – in possession of Hindustan Times – says the petroleum ministry and oil sector regulator Directorate General of Hydrocarbons (DGH) facilitated RIL to flout contractual stipulations on "discovery areas".
"The undue benefit granted to the contractor (RIL) is huge, but cannot be quantified," the report said.
The CAG's main focus is on Reliance's revision of the development cost of the KG-D6 gas field from $2.4 billion in 2004 to $8.8 billion in 2006 within a gap of only two years, without the company offering a single comprehensive development plan as required under the contract.
"The intent of the operator (Reliance) right at the outset, to submit revisions and changes to the development plan was evident all through from the submission of an initial development plan (IDP) rather than a comprehensive plan," the report said.
"The increase in cost… is likely to have significant adverse impact on the GoI's financial take," it added.
The CAG report also raised questions on high-value procurement activities by RIL involving huge payments. The CAG cited many instances where it could not verify the "reasonableness of costs incurred" by RIL.
This, the CAG said, was primarily because of a lack of adequate competition, including single financial bids, with major revisions in scope and specifications.
All this resulted in "adverse implication for cost recovery and GoI's financial stake," the CAG observed.
Jim Rogers , an influential investor, said he will sell his dollar assets into any rally as the greenback loses it status of world reserve currency, calling the Chinese yuan the "safest investment".
He described commodities as a "big bubble", although one that had much longer to run, advising short-term caution on gold.
"Don't put all your eggs in the US dollar," said Rogers at a conference.
"I happen to own some dollar at the moment, but only because it is so beaten down...If everybody is negative on it, including me, it's time to rally. If the dollar rallies, I suspect I'll sell all my US dollars and put my money in other currencies."
Rogers said he would sell and take a loss even if the rally failed to materialise.
He expected the Chinese yuan to rise in the next few years. "The Chinese yuan has been too low, either artificial or not. It doesn't matter. In fact I'm buying some renminbi this afternoon."
He also favours currencies from countries with well-managed natural resources, such as Canada and Australia.
Rogers warned about an imminent end of the bull run in the bond market, which he said may enter a long period of decline.
COMMODITIES BUBBLE HAS A LONG WAY TO RUN
Rogers, a known commodities bull, said he had sold short shares in most emerging markets as well as American technology stocks, and has commodities and currencies as his main portfolio.
Declining supplies in commodities, including food, oil and minerals, together with growing demand mainly from emerging economies, will continue to push prices of commodities prices higher until 2018 or 2020, he said.
Most women would marry for love over money -- unless the man is unemployed, according to a new survey.
Three out of four women said they would not wed someone without a job, and 65 percent would feel uncomfortable tying the knot if they themselves were jobless.
But more than 91 percent of single women said they would marry for love over money.
"It is ironic that women place more weight on love than money, yet won't marry if they or their potential suitor is unemployed," said Meghan Casserly, of ForbesWoman which conducted the survey with the website YourTango.com.
Even more telling, she said, is that 77 percent of women surveyed believe they can have it all -- a fulfilling relationship and family life, as well as a successful career.
But 63 percent of women said they work 40-59 hours, and 62 percent of women in a relationship said they spend just three waking hours or less with their partner during the work week.
"The career is really taking the No. 1 position for working women," Casserly said. "It's pretty ironic that this number of women believe they can have everything. How? When?"
Two out of five women in a relationship said their job was most likely to keep them up at night, according to the poll of 625 women. Job responsibilities and love life tied as the factors most likely to keep single women awake.
Thirty-two percent of women said they make more money than their partner and half said they would marry someone who earned significantly less than them, while 41 percent wouldn't.
Fifty-five percent of women said they would give up their career to take care of children if their partner asked them to do so. But only 28 percent would ask the same of their partner.
If women could find an extra hour in each day, 42 percent would spend it by themselves, instead of with their partner, friends or family or on work.
The survey results are available on http://blogs.forbes.com/meghancasserly/2011/06/21/career-love-recession-unemployed-and-engaged and http://www.yourtango.com/careersurvey.
Sino Forest Corp ( PINK: SNOFF ) , company's largest stakeholder dumped all the stake in the company. Stock was down 18% and might see further sell off.
Billionaire hedge fund manager John Paulson, the largest shareholder in Sino-Forest, has sold his entire stake in the Chinese forestry company in the latest in a string of setbacks triggered by a damning short-seller's report.
The Toronto-listed company's shares have collapsed in the wake of accusations by research firm Muddy Waters that it fraudulently exaggerated the size of its forestry assets.
Paulson, who himself made a fortune on a short bet against subprime mortgages, has been burned by the scandal that has engulfed Sino-Forest. The company has shed over C$4 billion in market capitalization since the beginning of June.
Paulson's Advantage Plus fund, one of the $38 billion firm's largest, fell 13 percent in the first two weeks of June, partly due to the plunge in Sino's share price.
"Due to the uncertainty over Sino-Forest's public disclosures and financial statements, we have sold our stock and await the results of the independent committee's investigation," a spokesman for Paulson & Co said in an e-mail on Monday.
While it wasn't immediately clear how much Paulson lost on the sale, his 14.1 percent stake in Sino would have been worth C$897.4 million as of the end of March. The same stake would be worth just C$94.8 million at Monday's closing price.
Earlier, one of Sino's most vocal supporters, Dundee Capital Markets analyst Richard Kelertas, suspended his coverage of the company, pending the outcome of the company's internal review.
Shares of Sino, which counts Glencore [GLEN 5.44 --- UNCH ] Chairman Simon Murray as one of its directors, fell even further on Monday, after Canada's Globe and Mail newspaper in a report said it uncovered "glaring inconsistencies" that raised more doubts about Sino-Forest's assets.
The company continues to deny the allegations leveled against it and said the newspaper report on its timber assets was an "incorrect portrayal" of its business that failed to account for the complexity of operating in China.
Sino-Forest, which buys and sells trees in China, said it stood by earlier statements that there are no discrepancies in its holdings. The company said Saturday's Globe report was published "without all of the facts."
The Globe said it stood by its story.
"The company would like to remind investors that most domestic and multinational companies with significant China exposure, a country with a rapidly evolving business environment, have structures and operations that are complex and significantly different from the North American environment and that can be complex to explain," Sino-Forest, which has set up a committee to review the charges, said in a release.
"The company ... stands by its public disclosure and, as far as possible, asks that investors trust that process, and allow it to be conducted fully and definitively, not over-judging single articles or publications that are not produced by persons necessarily familiar with the forestry business or business practices in China, that might not be fully sourced or accurate."
Analysts Turn Wary
Dundee's Kelertas, who had earlier slammed the Muddy Waters report as a "pile of crap," on Monday suspended his coverage of the Chinese company.
"Until such time as the company has made public the findings of the board appointed independent committee ... we are not in a position to comment on or otherwise speculate on matters as they relate to the business practice or valuation of Sino-Forest," he said in a note to clients.
Dundee, a member of the underwriting syndicate for Sino's equity offerings, has itself been named as a defendant in legal action against Sino-Forest.
RBC Capital Markets analyst Paul Quinn said in a note to clients he will maintain his "outperform" rating on Sino-Forest shares, but he cut his price target to $14 from $27.
"The allegations against Sino-Forest are material and expected to weigh on the company's share price for some time. We continue to expect that it will be some time before Sino shares trade at their pre-Muddy Waters levels," he said.
Sino-Forest's share price has plunged more than 85 percent since short-seller Muddy Waters questioned its business model and labeled it a fraud early this month. Its shares fell a further 14 percent on Monday to C$2.73.
The WaterWheel Makes Clean Water Cheaper, Easier To Carry
Not everyone can just turn on the tap to access clean water; in the developing world, women regularly carry five-gallon, 42-pound buckets of water on their heads. The Hippo Water Roller, a device that allows users to easily roll 24 gallons of water along the ground, has made life easier for over 30,000 people in the past 15 years--while becoming something of a cause celebre. But the device isn't cheap--it retails for over $100, which means that some of the people who need it most can't afford to buy it (communities often rely on sponsorship funding).
So there is an opening for the WaterWheel, a similar device that allows users to roll only 20 gallons of water at a time--but it retails for much less, between $20 to $30. And unlike the Africa-focused Hippo Roller, Wello (the hybrid social benture behind the WaterWheel) is aiming for distribution in India, which also has a water-starved population but higher-quality manufacturing facilities.
"The magic is in the business model," says Cynthia Koenig, founder of Wello. "It's not necessarily so much cheaper than other products on the market, but our business model is aiming for profitability through scale." Wello has thin margins, but the venture expects to break even after three years of operation through both sales of the WaterWheel and sales of advertising space on the device.
Wello is hoping to get the word out by partnering with local nonprofits, governments, and oddly enough, the Indian postal system. "Postal workers are encouraged to sell and distribute products, and they know everyone in the community," says Koenig.
Even with such a low price point, Koenig acknowledges that many people still won't be able to afford the WaterWheel. So she anticipates training a corps of local water delivery people who can make enough money from wheeling water back to their villages to pay for the device.
Wello plans on piloting the WaterWheel in Rajasthan, India in the next few months. And while the nonprofit has a long way to go before it can catch up to the Hippo Roller's sales, there can never be too many creative solutions to help the nearly one billion people who don't have easy access to clean water.
Technology Headlines for June 20 2011 ( Monday ).
1. ICANN has voted to change the Internet landscape by allowing potentially "hundreds" of new generic Top Level Domains to exist--that means you could see web addresses ending in .Canon or .Paris and more. It's a significant moment in Net history, as there are only 20-plus TLDs right now. But controversy has immediately arisen over the amount of money brands could be forced to spend to defend their IP over the new possible URLs.
2. Facebook has plans to launch itself fully into the streaming music game, and hot rumors are connecting the social networking site's plans with, among other providers, Spotify (which may explain why Spotify's managed to close deals with the music labels after years of trying). Facebook may content itself as being the arbiter of share information (via Connect and Likes) and other social data from providers like Spotify, circumventing dealing with labels.
3. As Bitcoin, the novel digital currency, hits the limelight a huge "bank heist" has occurred with a Hong Kong-based hacker attacking the main online exchange for Bitcoins, Mt. Gox. The attack collapsed prices to pennies from a $30-plus peak. Meanwhile, game giant Sega has been attacked and 1.3 million account details--including personal user info, but no financial data--have been stolen. LulzSec, claiming it wasn't involved, has offered revenge attacks to Sega. So far the gaming company does not appear to have accepted the offer.
4. Microsoft has been given final antitrust approval by the FTC to buy famous VoIP provider Skype, which is based in Luxembourg. Skype was then revealed to be firing key executives in order to avoid costly cash payouts, with several VPs, the Chief Marketing Officer, and the head of HR going--according to insiders the firings were motivated by strong opinions in Skype's existing management chain, which has undergone radical overhauls over the recent year.
5. The New York Post ignited controversy over the weekend by blocking access from Mobile Safari browsers on iPads to its website. This means iPad users can't access the paper, and are directed instead to the NYP's paid-access app. Since users of Android phones and webOS and Windows phones aren't affected, it's a clear attempt to have income not go to Apple but instead to go directly to the ailing paper.
