India, China to be global growth engines: WEF experts
India, China to be global growth engines: WEF experts
India, China to be global growth engines: WEF experts
Davos: Led by India and China, Asia will not
only become the global engine for growth but will also
increasingly exercise its influence on the rest of the world,
experts at the World Economic Forum (WEF) annual meeting here
have said.
“As their economic might grow, the region’s (Asia)
various societies will become more assertive and influential,”
WEF said in a statement, summing up the discussions on a
session on ‘The Rise of Asia’ yesterday.
Among the speakers, who participated in the session,
include President of Asian Development Bank Haruhiko Kuroda
and President and CEO of Genpact India Pramod Bhasin.
India and China continued to grow at reasonable rates
even when several developed countries witnessed economic
contraction. While India grew 6.7 per cent in 2008-09 and is
expected to rebound to 8 per cent this fiscal, China jumped to
10.7 per cent during the quarter ending December 2009 from a
low of 6.8 per cent during the period a year ago.
Speakers, while stating that it is not clear what will be
the impact on the world with the rise of Asia as it is a
diverse region, said focus on family and the primacy of
relationships over written contracts in business may be two
influential ‘values’. MNCs often find it difficult to
understand that employee loyalty in Asia is to the boss? the
individual? rather than to the company and brand name.
The rise of consumerism in Asia may also bring changes in
the way Western and other companies relate to customers, the
summary said.
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Govt imposes curbs on import of more steel items
As a measure to pre-empt dumping from China, government has slapped restrictions on imports of specific steel items used widely in the automobile, oil and construction industries.
With the shift in seamless tubes and pipes from the ‘Free’ to ‘Restricted’ list, the user industries will need a license from the government to import the spatiality steel.
Government has already put curbs on import of hot-rolled coils, the mother steel product, along with imposition of five per cent customs duty on specified iron and steel items.
Along with seamless tubes and pipes, wood and wood products would also come under the ‘Restricted’ list, as per the Directorate General of Foreign Trade notification.
The domestic steel industry with over 55 million tonnes capacity has seen a sharp change in fortunes with over 30 per cent decline in demand that followed the global meltdown.
With drying of export demand as well, largely because of surpluses in China post-Olympics, the market for steel has turned into a buyer’s delight.
The prices in the international market have seen sharp correction from USD 1,250 a tonne to around USD 500 a tonne, forcing steep erosion in the domestic rates.
Faced with demand erosion, several steel producers like Essar, JSW and Ispat have resorted to cut in production.
They also fear that China, equipped with ten times larger capacity than India, may dump its products in the Indian market.
The Government response by way of import restrictions and imposition of customs duty has given some comfort to the industry.
Welcoming the import restriction, Jindal SAW Managing Director Indresh Batra said: “Had the imports been allowed without restrictions, the Indian market would have been flooded with cheap Chinese products.”
Even as the Government has taken measures to check cheaper steel imports, the industry wants it to levy higher customs duty of at least 10 per cent to protect the sector.
Terming the import restriction on seamless tubes and pipes as “illogical”, Federation of Indian Industries Secretary General H L Bhardwaj said: “The move is illogical because India’s import of pipes and tubes is negligible.”
Sensex down 267 points in opening trade
Tracking weak global trend, the Bombay Stock Exchange benchmark Sensex lost over 267 points in opening trade on Wednesday on fresh selling by funds.The 30-share index, which remained firm in the last two trading session and closed higher by 460 points on Tuesday, fell by 267.25 points at 10,416.14.
The wide-based National Stock Exchange’s Nifty also plunged by 77 points at 3,157.90 as most of the participants traded lower.
Marketmen said weakening trend in global markets mainly influenced the trading sentiments.
SEBI warns of stronger action against overseas FIIs lending
Closely watching overseas activities by FIIs registered in India, market regulator SEBI has voiced its disapproval of their lending and borrowing activity and even warned of stronger action against this kind of practice.
“SEBI disapproves of the overseas lending/borrowing activity of FIls and the consequent selling pressure in the cash market in India. SEBI has communicated its disapproval to the FIIs. The lending/borrowing activity of FIIs is being monitored and if necessary stronger measures will be taken by SEBI as considered appropriate,” the market regulator said in a release on Monday.
SEBI has given a message to investors that markets are not being manipulated by Foreign Institutional Investors (FIIs),” said Nexgen Capital Equity head Jagannadham Thunuguntla commenting on the move.
“The measure will bring in more transparency in the securities lending and borrowing market and will reduce nervousness of the investors. It will send positive signal to the bourses that SEBI is observing the markets’ movement closely,” he said.
SEBI has asked custodians to communicate to their FIIs the disapproval of SEBI in this regard.
Last week, it asked FIIs and their agents to provide information on the quantity of participatory notes they have issued to overseas entities which could be used like short sale.
“The foreign institutional investors, sub-accounts were asked to submit information about the quantity of securities lent to entities other than in the Indian securities market - where the Overseas Derivative Instruments are issued - which has the effect of a short sale in the Indian security,” SEBI said.
Oil slides again ; now 50 percent off record highs
Oil prices slid further on Thursday as the global credit crunch and fears for slowing energy demand took their toll, with prices now down about 50 percent from July’s record highs :
New York’s main futures contract, light sweet crude for November delivery, dropped USD 1.34 to USD 73.20 a barrel. It slid USD 4.09 at the close of floor trading on Wednesday at the New York Mercantile Exchange.
Brent North Sea crude for November delivery eased USD 1.30 to 69.50. Brent settled down USD 3.73 on Wednesday in London, and dropped below the USD 70 level for the first time since June 2007 in electronic trading after the market closed.
Victor Shum, of Purvin and Gertz international energy consultancy in Singapore, said most commodities including oil were following stocks lower on fears for the global economy.
Japan’s Nikkei stock index plunged more than 10 percent in early trade on Thursday, the Singapore bourse was down almost six per cent, and the exchanges in Seoul and Australia dropped more than six per cent.
They were following the lead of Wall Street, where shares on Wednesday suffered their worst percentage drop in 21 years.
“Everything is down,” Shum said. “The fears about this global credit crisis leading to an extended economic slump, and perhaps a recession, really are causing investors to bail out of equities and also oil.”
Oil prices have plunged from record highs above USD 147, reached in July, because of worries over demand in a slowing global economy. The dramatic rise in oil prices was partly driven by a flow of investor funds.
Govt may review 3G auction schedule due to financial turmoil
Government is likely to review the time schedule for 3G spectrum auction amid anticipation that foreign participation in the auction would be less than expected in the wake of global financial crisis.
“I have to discuss it with the finance minister whether the financial condition is conducive for an auction,” Communication and IT Minister A Raja said in New Delhi on Wednesday.
However, he said the department is not slowing down the auction process 3G spectrum.
“There is no question of stalling or delaying the auction process, it is going on,” Raja said. The 3G spectrum is scheduled to be auctioned by December-end.
While DoT is thinking of discussing the issue with FM, Finance Minister P Chidambaram has expressed concern over delay in auction process for the third-generation or 3G spectrum.
The Finance Minister has expressed concern over the delay in commencing 3G/BWA spectrum allocation process through auction, Finance Ministry said in a communication to Telecom Secretary Siddartha Behura.
“Finance Minister would like to discuss the time schedule decided by DoT in this regard as soon as Secretary, Department of Economic Affairs returns from the annual meetings of World Bank and IMF in Washington,” it said.
Now that the DEA Secretary Ashok Chawla is back from Washington, sources said, the meeting can take place any time.
DoT has finalised Rothschild as e-auctioning agency to conduct auctioning of spectrum.
However, some of the players have questioned the decision to finalise Rothschild, saying it was the sole bidder, and therefore, may lack transparency.
DoT has pegged the reserve price of 3G spectrum for pan -India operations at Rs 2,200 crore but the government is expecting aggressive bidding, as it has allowed foreign players also to participate in the auction.
Sensex sheds 345 points in early
Sensex sheds 345 points in early trade on funds selling :
The Bombay Stock Exchange benchmark Sensex lost 345 points in early trade on Wednesday on selling by funds in metal, IT and banking sector stocks, triggered by weakening global markets.
The 30-share index, Sensex, which had gained over 955 points in the past two sessions, plunged by 345.75 points, or 3.01 per cent at 11,137.65.
similarly, the wide-based National Stock Exchange fell by 98.95 points, or 2.81 percent at 3,419.70.
Marketmen said overnight weakness at the US markets and similar trends in other Asian stock markets mainly dampened the trading sentiments.
Weak Indian rupee, which depreciated by 46 paisa to 48.55 against the US dollar, too dampened the trading sentiments, they said.
They said selling was wide spreading as all the sectoral indices were trading in the negative zone.
Among banking stocks, largest lender in the private sector ICICI Bank lost Rs 13.45, or three percent at Rs 433.65, while State Bank of India was down by Rs 7.90 at Rs1,520.50.
Other losers which dragged the Sensex down were Infosys Technologies, Satyam Computers, Tata Consultancy, Wipro, Reliance Industries, Reliance Infra, RCom, BHEL, Larsen and Toubro and Tata Steel.
Meanwhile, the US Dow Jones Industrial Average fell by 0.82 percent, while Hong Kong’s Hang Seng lost 2.46 percent and Nikkei down 1.36 per cent in early trade.
India can weather financial storm: FM
Finance Minister P Chidambaram on Saturday expressed confidence that India can weather the storm of financial crisis blowing across the world saying the country’s economic fundamentals and the banking system were strong.
He admitted there is a liquidity crunch in the market and that the economy was facing ’spill over and ripple’ effects of the global storm but held out an assurance that the “RBI is ready to take further steps and infuse more liquidity if necessary”.
Referring to the current global meltdown, Chidambaram said “there is a storm blowing in the world. We did not not create the storm. We are facing the spillover effects or the ripple effects of the storm.”
“We must brace ourself and weather the storm. I am confident that the Indian economy is strong and resilient to weather the storm and I would request all players in the economy to cooperate with the government in weathering the storm,” he told a news agency.
Chidambaram said “the weekend is a good time for people to reflect. Firstly, those who have money… there have been wage increases for the government servants, and many have received Diwali bonuses.”
“Those who have money should spend some money and should save some money. Savings in banks are completely safe. Our banks are well regulated and well capitalised. Depending on your risk threshold you can save in some other instruments. Someone with a low risk threshold should save in a bank,” he said.
The Finance Minister said for those who need money for running their businesses, trade and firms, the government recognised that there is a liquidity crunch.
“But we have responded swiftly and we have infused a huge amount of liquidity. Between now and October 25 or so, a huge amount of liquidity will find its way into the Market through CRR cut, fertiliser subsidy, additional spending on National Rural Employment Guarantee schemes and payment to banks for loan waiver,” he said.
Besides, the RBI is ready to take further steps to infuse more liquidity, if necessary, he added.
On deposits in banks, Chidambaram said “no depositor need have any reason to worry. Different investors have different risk profiles. But if you are an investor you should take informed decisions. The last thing you should do is to act in haste. The last thing you should do is to give room for panic.”
He maintained that the fundamentals of the real economy were strong. “If you ask me whether the fundamentals of the economy have changed so dramatically as portrayed in the stock market, the answer is no.”
In fact, Chidambaram said that some promoters were buying shares this time. Therefore, no investor need to take any decision in haste or in panic. “He or she should take informed decisions.”
Chidambaram said “The weekend is a good time to calmly reflect on the situation. Any citizen of India should reflect calmly while coming to the conclusion that we can weather the storm.”
The minister said inflation was inching down and huge capacities were being added. “Our regulators are vigilant and any citizen of India should reflect calmly on the way we should weather the storm.”
To a query, he said the export and import growth was 35.1 and 37.5 percent respectively in dollar terms.
He doubted the industrial production figures, which showed a plummeting of industrial growth to 1.3 percent, and said he has conveyed his concerns to the Ministry of Industry.
“There are certain concerns about the IIP figures and I have conveyed these concerns in the past and today to the Ministry of Industry,” he said reacting to the data on Index of Industrial Production figures released on Friday.
Chidambaram said “growth in capital goods in July was 20 per cent. This has fallen to 2.3 per cent in August. There cannot be such a dramatic shift in capital goods production. It can’t take place.”
“Therefore I have asked them to do a double check on these numbers. In July the figures were revised from 7.1 per cent to 7.4 per cent,” he said adding that if these are the numbers then the performance of August is not very satisfactory.
US turmoil may slow down India’s steel prod
Steel industry may face a further slow down and could be forced to bring down prices on account of global turmoil in tandem with dip in domestic demand. Industry would be forced to cut down production if the prevailing conditions prevail, industry expert said, adding that the growth targets are being revised from double digit to single digit.
“The production growth in the steel sector is likely to decline to 8-9 percent this year from the expected 12-13 percent due to global economic slowdown,” JSW Group Chief Financial Officer Sheshagiri Rao said.
Indian steel companies would have to cut prices to survive, else market will be flooded with cheaper imports, he said.
Globally, steel prices have softened by about USD 350 per tonne in the last couple of months, the reason why large-scale consumers are heading for cheaper imports from countries like China and Ukraine.
“The global turmoil has affected demands and put pricing pressure in the US. These would have a ripple effect on Indian market too,” an Essar Group spokesperson said.
British steel giant Corus, part of Indian conglomerate Tata group, has already said it is taking steps to optimise production as per the changing demand scenario.
Amidst the changing dynamics in the global markets, the domestic steel firms, however, don’t see any impact on their long-term expansion plans.
“We have secured finances for our projects lined up till 2010. In this scenario, however, raising capital from abroad will not be easy,” Rao said.
India’s largest steel producer SAIL too said the crisis would not affect its expansion plans as it has enough financial resources.
“There will be more or less no impact on us, but housing and construction sector will take a beating,” SAIL Director Commercial Shoeb S Ahmed said.
SAIL does not borrow money from abroad, nor does it export products in huge quantities, he added.
Steel Secretary P K Rastogi, admitting a temporary slowdown in demand for the alloy, said “it would be too early to jump to any conclusion with regard to decline in production growth and effect on long-term expansion plans of companies”.
Rastogi said domestic steel prices have not come down to the global level and the demand for the alloy is expected to pick up from this month.
On cutting steel production amidst the decline in demand globally, Steel Minister Ram Vilas Paswan had last week said that there was no case for it as India’s infrastructure sector continues to grow.
Many Chinese steel mills have reportedly decided to cut production by up to 15 percent due to slump in demand and declining prices.
Recently, world’s largest steel producer ArcelorMittal had announced a cut in production at its various units across the world.
In the first half of 2008, steel prices were at a higher pedestal, mainly on the buoyed demand from China, where 29th edition of the Olympics were held. The demand fueled steel prices, which almost doubled from last year’s level.
Thereafter, steel consumption declined, mainly on the lack of demand from the infrastructure sector in the midst of global slowdown
Consuming industries have also withheld their demand expecting a further decline in prices leading to a slump in consumption.