Friday, June 5, 2015

In search of opportunities


Thought for the day
"It is only by not paying one's bills that one can hope to live in the memory of the commercial classes."
-          Oscar Wilde (Irish, 1854-1900)
Word for the day
Middling (adj)
Mediocre; ordinary; commonplace; pedestrian.
(Source: Dictionary.com)
Malice towards none
Corruption of mind, ideas and preferences is equally detrimental to the progress of a society as the corruption in money and material matters.
First random thought this morning
Till Tuesday morning the financial experts were almost unanimous on the likely rate cut by RBI. Governor Rajan did not surprise the markets.
However, a couple of days after the policy announcement the street is vertically divided on the future course of action. Forecasts now vary from 75bps cut to no cut.
The governor has certainly brought back the element of surprise in the policy making. This un-does whatever Governor Rajan has sought to do since he took over the mantle at RBI.

In search of opportunities


OECD recently cut its global growth forecast for 2015 from 3.7% to 3.1%. To put this in perspective, the global economy grew at 3.9% CAGR in the decade through 2011. In 2014 global economy grew 3.3%.

OECD said that unlike past instances where the economic recoveries were aided by investment in manufacturing capacities and technology, this time it is not happening. Besides, lack of demand is holding back employment, wages and consumption.

US and China have been two big engines of global growth in past decades. Both these engines running out of steam. The OECD sees the U.S. economy expanding 2% this year, down from 2.4% in 2014. China is expected to grow 6.8% this year, down from 7.4%.

At first this trend might look ominous for Indian economy and markets. But a second look exposes underlying opportunities. For example, consider the following:

(a)        The immediate fear of financial investors worldwide is the reversal of rate cycle in US. Slower growth and persistent deflationary pressures may delay the eventual "lift", providing a much needed window of relief to Indian economy. This may be particularly critical if the monsoon indeed turns out be bad and financial stress in the economy rises.

(b)        Lack of investment demand in developed countries and China may augment availability of capital for starved Indian projects.

(c)        Persistent deflationary pressures may keep commodity prices lower, to the benefit of importing economies like India.

(d)        Lack of demand may render a lot of global manufacturing capacities and capital equipment redundant. Given the rock bottom freight rates, Indian miners, construction contractors, and manufacturers may sources these capacities and equipment at much cheaper rates.

            This may be a threat to the "Make in India" plan and domestic capital equipment manufacturing industry, but still a big opportunity for the overall economy.

(e)        Slower growth resulting in lower income, lower subsidies and higher fiscal deficit may strengthen the demand for cheaper services, medicine, clothes, vacations etc. Thus benefitting economies like India, Bangladesh, Sri Lanka etc. Though some engineering exports may suffer.

            Though some slowdown in demand is naturally expected, I would not be unduly worried about severe impact on Indian IT and pharma companies.

In view of this, I am more confident about my underweight on commodities and cyclical capital goods manufacturers. I would be inclined to look at large contractors who are in a position to compete with global construction companies, import/lease equipment's and capacities from overseas markets and sustain their hare in incremental business.

I am evaluating whether any change is needed in overweight consumers in light of likely deficient monsoon and Nestle controversy.
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Thursday, June 4, 2015

Believe what you know

Thought for the day
"There is a luxury in self-reproach. When we blame ourselves we feel no one else has a right to blame us."
-          Oscar Wilde (Irish, 1854-1900)
Word for the day
Oxter (n)
The armpit
(Source: Dictionary.com)
Malice towards none
What is the ratio of people who have lost money in Unitech shares vs. the people who have made money in Unitech shares in past 20yrs?
If it is more than 100:1, does regulator need to take any step?
First random thought this morning
The prospects of third consecutive crop damage this kharif season (after poor monsoon last year and Rabi crop damage by hailstorms and excessive winter rains) does not augur well for the economy in general.
The challenge before the government is that the PSU banks' balance sheets are already crippled by massive corporate delinquencies. Exploiting these undercapitalized and stressed lenders for farm sector may not be feasible.
It would be interesting to watch how it reflects on political establishment!
Believe what you know
In one of his famous speeches PM Modi had said, "I am a poor person and I bother about small things". I really loved this. I believe this is the attitude needed to take India forward.
Given the six decades legacy of adhocism and Jugaad the task could be completed with least disruption only if we aim to build brick by brick.
The programs and idea for socio-economic growth and job creation proposed by the incumbent government are commendable. However, most of these ideas are massive and intimidating. They have substantial prerequisites and require commitment of large amount of resources for execution.
For example, development of smart cities would need large tracts of land, digital connectivity, trained and skilled administrative machinery, besides material capital investment. Similarly, highway projects, industrial corridors, waterways etc. all need huge capital, technology and other resources which may not be available within the country at present.
Even the pet project of PM Modi - Clean India - would need a revolutionary change in mindset of the people to be successful. This is beside significant capital layout and resource allocation. Building public toilets without adequate water supply and disposal mechanism may only lead to dissipation of resources.
In my view, the right way forward is to take baby steps rather than intimidating the audience with grandeur of the vision and planning outlay.
Mission of a young monk Jagdishanand in Uttrakhand hills could be a role model for the government in this respect.
This monk started his own Child Hygiene project in 2014 with capital of Rs3000. He bought 100 nail clippers and placed them in 20 primary schools across 20 villages in Pauri district.
One nail clipper is tied with the class room window through a small metal chain. The monk visits each school every fortnight and motivates children to clip their nails. He also teaches them how to properly wash hands.
He has received 300 more nail clippers and two more volunteers recently. He plans to cover 100 schools with them.
Through his mission he is not only creating awareness about hygiene amongst children but also revolutionizing the mindset of a whole generation. With Rs3000 he has already ensured hygienic living of at least 300 future families.
I am sure there are thousands of such missionaries who are working silently and selflessly for the Country and her people. PM Modi having been a full-time volunteer of RSS, knows it much better than most of us.
The point is whether he "believes" in what he "knows"!
If he does, India is in secure hands and we need not worry about the bumps on the way. Even if he is suspicious about his own knowledge of the problems and plausible solutions, there is one Jagdishanand in each street of the country to take care.
(Go to top)
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Wednesday, June 3, 2015

Stressed, uninspiring and apathetic


Thought for the day
"I sometimes think that God in creating man somewhat overestimated his ability."
-          Oscar Wilde (Irish, 1854-1900)
Word for the day
Jiggery-pokery (n)
Trickery, hocus-pocus; fraud; humbug, manipulation.
(Source: Dictionary.com)
Malice towards none
No European summer breaks for Congress leaders this year.
What about a month of "introspection hiatus"?

 Stressed, uninspiring and apathetic

Governor Rajan obliged the government and markets by a rather reluctant 25bps repo rate cut. However, in doing so he might have caused some harm to the market confidence rather than helping it out.
The latest RBI policy statement and subsequent press briefing by the Governor Rajan had five disturbing features.
(a)        Recently on many occasions, the RBI has admitted to the elevated and still rising level of stress in the financial system. This stress has mostly prevented the banks from transmitting past cuts to the business borrowers. There is little in the policy statement to address this issue. The policy statement does speak of stress in power discoms and need for funding of some bank balance sheet. But there is nothing to suggest how RBI would like to manage the challenge of up-fronting of rate cuts in still rising financial stress environment.
(b)        RBI has raised January 2016 inflation target to 6%, anticipating higher risk to price stability from sub-par monsoon and external factors. Despite slow down in headline numbers, RBI has admitted that the cost of living has been rising unabated impacting the household consumption and savings. A rate cut at this stage might weaken the RBI's battle against the inflation.
(c)        In the latest policy statement and subsequent press briefing the Governor rather curtly nudged the banks to lower the lending rates. This may put the banks and the regulator on a confrontational path, impacting the business of the lenders as well as the confidence of the borrowers.
(d)        The Governor has highlighted the existence of material external and internal challenges to growth. Under the circumstances a stronger INR could only negatively impact the growth by adversely affecting the exports. Given the large output gap, lower capacity utilization and benign demand growth conditions, the imports may not likely to rise materially anyways.
            Moreover, since the governor has clearly belied his promise of making the policy objective and data driven (see here), this brings the element of unpredictability and surprise in the policy making. This should keep the foreign investors guessing about the timing of their investment in Indian assets and businesses. Thus adding to the volatility in flows and therefore current account.
(e)        The last and the worst was the poor body language of the Governor. While announcing the policy he was nowhere closer to his cheerful self, he is best known for. He appeared stressed, uninspiring and apathetic. "If" it is indicative of a chasm between the regulator and the government or regulator and the lenders, or all three, this may not be good for anyone.
In my view, the rate cut announced by RBI might be redundant, and prove to be counterproductive. The markets correctly reacted negatively to the event.
(The third bi-monthly monetary policy statement will be announced on August 4, 2015.)
Expert views on RBI policy stance
"A repo rate cut of 25 bps was expected and already factored in by most of the market participants. It's consistent with the RBI's cautious stance, as it remains concerned about the monsoon outcome, geopolitical trends & U.S. Fed action. RBI's future actions will be governed by not just the above stated points but also the government's fiscal responses to adverse monsoon outcome and its efforts to push infrastructure growth." (Rupa Rege L&T Finance)
"Besides the as-expected 25 bp rate cut, the RBI's tone errs on the side of caution on the price and growth outlook. Growth projections were revised down a notch, reflecting the central bank's belief that the ongoing recovery trend will be interpreted as modestly positive and not as strong as new headline GDP seems to suggest.
RBI will also be wary of aggressively loosening policy reins given the likelihood of higher public spending to kickstart the capex cycle and fiscal support to compensate weak agricultural sector (if monsoon disappoint) this year." (Radhika Rao, DBS)
"This is as per the market expectations: a rate cut followed by indications of a long pause. You might get a knee-jerk rally in bonds on the rate cut, but frankly I think markets will settle down to where they were and maybe even weaken a little bit ... I don't really see yields, either in government bonds or corporate bonds, going down significantly from where they were before the policy (meeting): so it begs the question of how much of this can be transmitted by banks, if there is no real change to interest rates through the policy." (Ananth Narayan, Standard Chartered)
"Broadly in line with what we were expecting, which is RBI is basically saying that this will be an extended cycle, and in the near term with some of the risk they are seeing on inflation, they'd probably be on pause after today's rate cut. We do believe that RBI is probably over-conservative in its inflation forecast, and the 6 percent inflation they expect by the end of the calendar year or early next year, is probably going to be undershot. Thus, there is a possibility of a further rate cut. For that now we will need to see data as it comes in." (R. Sivakumar, Axis Bank AMC)
"In line with anticipation, RBI has cut the repo rate by 25 bps. Further rate cuts definitely would be contingent on a lot of factors, in terms of the impact of monsoons etc. (Shubhada Rao, Yes Bank)
"We'd like to see what happens in the market. You know we did a base rate cut last month...We'd like to see in the next two or three weeks what the action is in the market and accordingly we'll take action. I have to say that demand for credit remains weak. So probably the passing on too will also come in due course of time." (Ranjan Dhawan, BoB)
"I think the implication of the guidance is that the RBI is going to wait for more inflation data and also for more clarity on risks to inflation. We hold to our call that the RBI will be on pause for the rest of the year until December.
"There is likely to be a partial pass-through from banks. If government wants accelerated pass-through, whole public sector space, separate the stronger from the weaker banks, but that's a policy call the government has to take." (A. Prasanna, ICICI Securities Primary Dealership) (Reuters)
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Tuesday, June 2, 2015

To cut or not to cut is not the question

Thought for the day
"The only thing to do with good advice is to pass it on. It is never of any use to oneself."
-          Oscar Wilde (Irish, 1854-1900)
Word for the day
Agog (adj)
Highly excited by eagerness, curiosity, anticipation, etc.
(Source: Dictionary.com)
Malice towards none
Reports suggest that the government is considering Exit Exam for MBBS doctors.
What problem does this exam seek to solve?
Can't Munna Bhai pass this exam also by proxy?
Do we have Munna Bhais only in Medical profession?
 

To cut or not to cut is not the question

 
The GDP date for 4QFY15 has further queered the pitch for Gov. Rajan.
The government authorities are claiming that the data shows that the economic recovery is taking off and rate cut at this point in time will provide the necessary escape velocity. The finance minister himself has publically coaxed Gov. Rajan to cut rates to help the struggling industry and infrastructure developers.
The independent economists however are discounting the recent GDP data as accounting miracle that is not fully corroborated by the evidence available from other sources like corporate financial results, consumption data, industrial production numbers, credit data and other lead indicators. The general view is that economy is still taxing slowly towards the runway and take off is at least couple of quarters away.
The analysts community is mostly expecting a 25bps cut followed by a long pause. Flipping through various reports, I could find little reasoning behind this expectation. Most of it is "just like that".
In my view, the rate decision of Gov Rajan this morning will be driven more by "INR" than "Industry".
Given the elevated level of stress on corporate balance sheets, as evident from the FY15 annual accounts, low demand environment, and poor credit growth despite comfortable liquidity conditions threeo things are more than clear - (a) few bankers want to take risk of giving fresh money to a stressed corporate or even a new project; (b) few corporate balance sheet will justify further lending even if rate fall by 50bps; and (c) some aggressive bankers may be chasing households with high priced relatively small ticket consumer loans, compromising prudent norms and laying foundation for a credit bubble 4-5yrs down the lane.
Under these circumstances a 25bps repo cut would be mostly redundant.
Gov. Rajan would not like to make a bigger cut, as it would risk further strengthening of already strong INR; force more liquidity infusion for buying USD; and thereby weakening the fight against price rise.
From market perspective I will not be too enthusiastic about a rate cut this morning. A sharp rise in financials may provide some short selling opportunities.
A cursory scrutiny of the FY15 annual accounts of profit making private sector undertakings shows a distinct trend of tax refunds and interest on tax refunds. State Bank of India alone reported Rs10bn interest income on IT refunds.
The official claims of no Tax Terrorism need to be closely examined by analysts in light of this trend. An informal interaction with many large tax payers and PSU managers suggests that the practice of forcing tax payers to pay higher advance tax to achieve tax collection targets is still prevalent. This "terrorist" way of deficit financing belies the government claims of "peace" with tax payers. Given that the rate of interest payable on IT refunds is higher than the present 365d treasury bill yields, it also does not make much financial sense.
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Monday, June 1, 2015

Investors should think beyond 2015


Thought for the day

"I am so clever that sometimes I don't understand a single word of what I am saying."

-          Oscar Wilde (Irish, 1854-1900)

Word for the day

Polymathy (adj)

Learning in many fields; encyclopedic knowledge.

(Source: Dictionary.com)

Malice towards none

Congress party is losing the plot at unbelievably fast pace!

Investors should think beyond 2015


The events like summer Char Dham yatra in Uttrakhand hills and Kumbh Mela etc., provide a good opportunity to meet people from across the country and assess the general mood.

My team traveled to the holy shrines of Sri Kedarnath and Sri Badrinath in Garhwal Himalayas last week and had the opportunity to interact with over 500 people from 13 states.

The key points that emerged from these interactions could be summarized as follows:

(a)   The general mood of the people could be described best as despondent.

(b)   People across the demographic chart are feeling elevated level of stress, financially as well as socially.

(c)    The disposable income and tendency to spend is showing a marked improvement over the level seen a few years ago. The traditional high propensity to save is waning slowly.

(d)   The number of private vehicles visiting the holy shrines has multiplied. The administration has taken virtually no note of the trend, as could be seen from the parking arrangements. NGT also need to take a note.

(e)    People in general are satisfied by the incumbent government at the Center. Most people from rural areas believe Niyat (intention) is more important than the Seerat (Deeds). The general sense is that PM Modi needs to be given more time and full support.

(f)    Most people are amused by the sudden invigoration of Rahul Gandhi. We could find none who is taking it seriously or believing this phase of activism to last till 2019 elections.

(g)    The people from Bihar were rather concerned about the prospects of Laly-Nitish combine wining in Bihar elections. BJP appears to party of choice. People were however skeptic about the infighting in the state unit.

(h)   Akhilesh Yadav appears to have made a remarkable recovery in UP after 2014 general election rout.

(i)    Till a few years back, the farmers and rural laborers used to be joyous and ecstatic for being able to undertake this highly propitious pilgrimage. They would not complaint about the lack of facilities, dishonest transporter and shopkeepers etc. This time it was not the case. Most people were complaining and appear undertaking the pilgrimage as a matter of obligation.

(j)    The signs of distress and devastation from the 2013 floods were visible all along the route. The local people were cynical about government help and alleged huge scam.

My conclusion is that economy might take more than two quarter to bottom out. The private consumption may dip little further before picking up. The popular media debate over PM Modi losing popularity may be little misplaced.
 
 

Nifty: Once in eight year opportunity on the anvil

From weekly charts of Nifty it is clear that the market may be headed down to its major trend support range of 7630-7860 in next 18-20 weeks. There is a reasonable probability of briefly testing a lower level of 7200 in this period.
As stated a couple of week ago (see here), Nifty may peak between 8550-8630 range in next 12 trading sessions.
 
A fall below 7860 on weekly basis will turn the risk reward extremely positive and provide a once in 8yr cycle (2013-2021) buying opportunity.
 
Weekly Nifty chart for past one decade. Source: Falcon)
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Tuesday, May 19, 2015

The earnings' show so far

Thought for the day
"To see and listen to the wicked is already the beginning of wickedness."
-          Confucius (Chinese, 551-479BC)
Word for the day
Cacophonous (adj)
Having a harsh or discordant sound.
(Source: Dictionary.com)
Malice towards none
Can Rahul Gandhi sustain his new found aggression till 2019?
Most of the issues he raising are likely to fizzle out in next one year itself.
 

The earnings' show so far

Asian Paints' 4Q results provide further evidence of slowdown in consumer demand. The company could sustain profitability due to lower raw material prices, which has again been the trend across the consumer segment.
A primary analysis of the results and consequent corporate commentaries brings out the following broad trends:
(a)   The consumption demand has slowed down considerably, and likely to remain subdued for another quarter, primarily due to poor show in rural income. However, most managements have guided for gradual pickup from 2HFY16.
(b)   Both the consumer durable and FMCG companies have managed the cost well and improved margins on normalized basis. None of the management so far has guided any material deterioration in the demand and price conditions going forward.
(c)   Exporters (IT and Pharma) have suffered due to poor demand conditions in some key markets like Europe, and Latin America. The cross currency headwinds have hit most companies. However, unlike 2008-09, most companies have managed their currency exposures well and no material forex losses have been reported.
(d)   Industrial segment has expectedly suffered due to poor investment demand. However, most large companies have been able to meet the subdued expectations. The stress in visible in mid and small cap, especially highly indebted companies.
(e)   Reality sector companies have reported mixed results so far. The well managed south based companies have reported decent numbers and have guided decent growth going forward.
(f)    Financial companies and banks have reported huge rise in delinquencies in restructured assets. The credit growth has been on the lower side. However, the cost efficiencies have improved across the board. Operation numbers are as per expectations or better.
SC clears doubts on obligation to buy power from green sources
In a precedent-setting judgement pronounced last week, the Supreme Court of India has laid down that owning a captive power plant does not absolve a company of its obligation to purchase part of its power consumption from green sources, such as wind and solar.
The judgement implies that the various companies who have not been buying green power by taking shelter under a legal ambivalence, now face enforcement of their obligations.
The case pertains to an appeal of Vendanta group’s Hindustan Zinc Ltd against a 2012 verdict of the Rajasthan High Court, which said that the State electricity regulatory commission was right in imposing the ‘renewable purchase obligation’ on the company, even though the company runs its own captive power plants, of about 475 MW capacity.
 “The renewable purchase obligation imposed upon captive power plants and open consumers through the impugned regulation cannot in any manner be said to be restrictive or violative of the fundamental rights conferred on the appellants…..we do not find any reason to interfere with the impugned judgement (of the Rajasthan High Court),” the apex Court’s order said.
Impact of the order
The Supreme Court’s order brings clarity to the point as to whether or not companies that have captive power plants are covered by the law that mandates green power purchase.
Some other companies had impleaded themselves in the case, filing counter affidavit with the Supreme Court — Ultratech Cements, Mangalam Cements, Binani Cements, Trinetra Cements, Shree Cement, Rajasthan Textile Mills Association, DCM Shriram Consolidated Ltd, JK Tyre Industries and Lucid Coloids Ltd.
“All other interlocutory applications for impleadment/ intervention/ stay/ directions are disposed off,” the order says.
As such, the order will have far reaching implications on India Inc. Vishal Pandya, Founder of REConnect, a consultancy that operates in the area of renewable energy certificates trading, observes that several High Courts have stayed the imposition of RPO on captive power producers.
“With the Supreme Court, these stays will become redundant,” Pandya said.
“The order will provide support to the State electricity regulators to impose RPO regulations more forcefully and enforce them effectively,” he said. (Business Line)
Oil prices rise on Middle East fighting; OPEC output in focus
Oil prices edged up on Monday following fighting in Iraq and Yemen, but Iranian comments that OPEC was unlikely to cut output as well as signs of strengthening U.S. production capped gains.
Front-month Brent futures were up 12 cents at $66.93 a barrel by 0556 GMT. U.S. crude rose 26 cents to $59.95.
Prices were supported by concerns that conflict in Iraq and Yemen could disrupt supplies after Islamic State militants said they had taken control of the Iraqi city of Ramadi in a big blow to the government.
In Yemen, a Saudi-led coalition resumed air strikes against Houthi militia in Aden, a port-city on the shores of key Middle East oil routes.
Despite these Middle East conflicts, analysts said oil markets remained oversupplied, and that the glut could worsen if U.S.-production picked up and output by producer-club OPEC remained strong.
"Oil prices appear to have outpaced the improvement in underlying fundamentals," Barclays said on Monday.
Iran's Deputy Oil Minister Rokneddin Javadi told Reuters on Monday that OPEC was unlikely to cut output at its next meeting in June, and that Iran hoped its crude exports would return to pre-sanctions levels of 2.5 million barrels per day (bpd) within three months once a deal to lift an oil embargo is finalised.
A deal over Iran's disputed nuclear programme between Tehran and world powers could see sanctions on Iran lifted if a more permanent pact is finalised in June. Because of the sanctions, Iranian oil exports have fallen to about 1 million bpd since 2012, mainly to Asia.
In the United States, Goldman Sachs said that despite an expected dip in output in the second half of this year, production would increase by 205,000 bpd in 2016. (Reuters)
...Gold too climbs to fresh three-month high
Gold jumped for a fifth straight session on Monday, climbing to fresh three-month highs, as soft U.S. data bolstered hopes the Federal Reserve would not hike interest rates soon.
The metal has been supported in recent days by sluggish U.S. economic data, which has hurt the dollar and altered expectations regarding the Fed's monetary policy.
The dollar languished around a three-month low against the euro on Monday, after weak data on U.S. industrial production and consumer sentiment.
The weak data bolstered views the economy was not recovering strongly enough for the U.S. central bank to raise rates from record lows. This has supported non-interest-paying bullion, which would have seen demand decline with higher rates. (Reuters)
58% of Indian employers facing talent crunch
Notwithstanding the recovery in job market, 58 per cent of India employers are finding it difficult to fill positions and there is a significant talent shortage in accounting and finance sector, a survey showed.
Globally, 38 per cent of employers face talent shortage. In India, however, the number stood at 58 per cent, ManpowerGroup's 10th annual Talent Shortage Survey said today.
Even though talent crunch persists for Indian companies, they are better off than last year. In 2014, 64 per cent of employers said they faced difficulty in finding the right people.
"The demand index for IT and accounting professionals have been on a continuous rise. Focus on technology up-gradation and better financial access will drive the sectors growth in the coming months," said A G Rao Managing Director of ManpowerGroup India.
Employers in India are finding it most difficult to fill jobs in accounting and finance, IT staff, secretaries, receptionists, administrative assistants and office support.
The other jobs that are most in demand in India this year include, teachers, engineers, communications staff, sales manager, engineers, communications staff, sales manager, executives, legal staff and researchers.
As per the survey, around 13 per cent of Indian employers said talent shortages are having a negative impact on their ability to meet client needs.
However, few employers are putting in place strategies to address the talent crunch problem, the survey added. (ET)
For first time in 20 years, Indian mobile phone sales drop
Mobile sales dropped 14.5% in Q1 (January to March) 2015, on a quarter-to-quarter basis, compared to Q4 (October to December) 2014; from 62 million handsets in Q4 2014 to 53 million handsets in Q1 2015.
The decline in smartphone sales from quarter-to-quarter was 7.14%. Cheaper “feature” phones performed worse, with an 18.3% sales decline over the same period.
 
 
FM seeks rate cut from RBI
 
Trivia
Each crisis that materially disrupts social, physical, or economic life of people institutes some changes of far reaching implications.
For example, a cardiac arrest forces material changes in the life style of the person. The national emergency imposed by Mrs. Gandhi changed the socio-political fabric of the Indian society forever. The currency crisis of late 1990s changed the economic structure of countries like Thailand and South Korea.
The global financial crisis that started 2007-08 is also shaping many changes of far reaching impact in global markets.
While the non-conventional monetary policies used to diffuse the crises are still being tested and yet to find recognition in the economic text books, the new stringent norms for banking, cross border investments, money laundering, and leash on fiscal profligacy of many countries are some changes of far reaching implications that are already coming into effect.
One serious change that is increasingly becoming evident is the global aid for poverty alleviation due to fiscal constraints of the donor nations. The stress and non-compliance in the aid receiving jurisdictions is rising and may continue to rise in coming years. Africa that emerged as favored investment destination a decade ago must be "under review" at investment banks.
You may also want to read the following:
Euro Wreaks Havoc on Carry Trades in Rally Almost No One Foresaw
Tspiras Endgame Nears as Greek Bank Collateral Evaporates
Chinese Maternity Tourists and the Business of Being Born American
Fed's Evans says FOMC could look at rate hike in June
 
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