20.03.2008

• Short selling to be allowed from 21^st April
• It is very rare to see news reports to be very packed and comprehensive in saying about an issue. Normally that is the preserve of op-ed articles and editorials. But today’s headline in ET is an exception. I excerpt below the first few sentences on short selling:
• ALL classes of investors — retail as well as institutional players like FIIs and mutual funds — will be allowed to short-sell shares in the spot market from April 21.
• Short-selling refers to the practice of selling a stock which the seller does not own at the time of trade with the hope of buying it back at a lower price. At present, individual traders shortsell shares during the day and square off their positions before the closing bell. This is what is popularly called ‘day trading.’ However, institutions are not allowed to indulge in such intra-day speculations.
• Now, SEBI is putting in place a mechanism where the short-seller can borrow the shares to meet the delivery commitment. Just as an investor borrows money to buy shares, it will now be possible to borrow shares to sell. Under this, all categories of investors can now lend the stocks they own and borrow the ones they don’t.
• However, SEBI clarified that ‘naked short-selling’ will not be permitted and all investors will be mandatorily required to honour their obligation of delivering the securities at the time of settlement. What this means is that day traders would no longer be in a position to sell and then buy back during the day. The new guideline will not only force these active investors to change the way they play the market, but also impact liquidity in the short term.
• We have heard about BPO, KPO, LPO etc. But it is time we also know something about APO.
• Actuarial Process Outsourcing. Know anything about actuaries? We noted about this sometime back in our blogs.
• Actuaries are professionals who calculate insurance risks and premiums and assess the financial impact of a future event.
• Acute talent shortage and high costs involved are driving insurance giants in the US and the UK to outsource their actuarial work to India.
• Mathematics and statistics graduates are now the most sought-after people for this work.
• How do you get energy from estuaries?
• Do you know that at estuaries, when fresh water and salt water mix, they are warmed by 0.1 degree Celsius? Remember anything about osmosis that we learnt as high school children?
• This is at the heart of harnessing power from estuaries. It is estimated that world’s estuaries hold a potential of about 20% of the world’s electricity demand. Scientists are working to make the technology overcome hurdles of poor cost-effectiveness of the membranes used in the process.
• Two small projects – one in Norway and another in Netherlands – are expected to come into operation this year that produce power through this technology.
• Arthur C Clarke
• He is no more. He is 90. He breathed his last in Sri Lanka, his adopted home. He is British.
• He is best known for his work on the movie “2001: A Space Odyssey.”
• He was one of the first to suggest the use of satellites orbiting the earth for communications purposes. In the 1940’s he forecast that man would reach the Moon by the year 2000, an idea that experts at first dismissed. But barely 29 years later Neil Armstrong set foot on Moon.
• V Krishnamurthy committee
• It was set up by the Prime Minister to suggest measures to help exporters tide over the rupee crisis.
• India is guzzling diesel
• I am surprised to know that internationally petrol prices are lower than diesel’s. Diesel costs on an average about $120 per barrel while petrol costs about $105 per barrel.
• Diesel accounts for 40% of the liquid petroleum products consumed in the country. The country is expected to consume about 120 mn tonnes of liquid fuel this year and 8 mn tonnes of LPG.
• Diesel consumption has gone up by about 20% in the past three months against the average of 2-4% over the years.
• Experts are searching for answers for this huge surge in demand for diesel.
• Subprime crisis can fuel commodity bubble
• When we started noting about the subprime crisis, I was wracking my brain to look at what other possible consequences this crisis could have.
• Kemal Dervis the Administrator of UNDP says that ever since the 1990’s the strong US macro policy responses to the existing crises have led to one asset bubble being replaced by another.
• After the East Asian currency meltdown in mid-90s, dotcom bust came at the turn of the century, which was followed by mortgage-backed securities crisis from 2004 to 2007.
• He feels that it may now be the commodities, which are now rising in price at an unreasonable and unsustainable rate.
• He opines that asset bubbles have had the root in real economic changes and market friendly reforms in emerging markets making them attractive destinations for investment.
• So, is it time to find fault with globalization?
• Discussing as we are about the subprime crisis, is the Fed reacting too overzealously to tackle the financial fall-out of the recession?
• Some experts, (Bush included, though he is no expert on these matters) are saying that the Fed may be acting overjealously in reducing interest rates. With the latest interest rate cut to 2.25%, it has brought the cost of funds to almost zero. This is because when you take the inflation into account, the cost of funds almost becomes zero, if not negative.
• An unnecessary spat but a seasoned response from the sporting greats
• Media reports quoted Anju Bobby George, one of our Olympic hopefuls, as saying that she doesn’t consider Milkha Singh and PT Usha as Asian class, but not world class.
• Both Milkha and Usha have missed bronze medal in 400 meters (the latter in hurdles) by a whisker. That was in Rome and Los Angeles Olympics respectively.
• The comment by Anju, if true, was unsportsmanlike; no doubt. But the other two greats have reacted very graciously saying that Anju should concentrate on 2008 Olympics and make us proud.
• The new face of global hunger
• I like reading the writings of Secretaries General of the UN writing from time to time. This is because, while various countries’ leaders keep grappling with their national issues, it is the UN Secretary General that is usually bothered about the world problems. Look at what our present UNSG is offering as solutions to the problem of world hunger.
• First, we must meet urgent humanitarian needs. This year, WFP plans to feed 73 million people globally, including as many as 3 million people each day in Darfur. But to do so, the WFP requires an additional US$500 million simply to cover the rise in food costs. (Note: 80% of the agency’s purchases are made in the developing world.)
• Second, we must strengthen UN programmes to help developing countries deal with hunger. This must include support for safety net programmes to provide social protection, in the face of urgent need, while working on longer-term solutions. We also need to develop early warning systems to reduce the impact of disasters. School feeding—at a cost of less than 25 cents a day—can be a particularly powerful tool.
• Third, we must deal with the increasing consequences of weather-related shocks to local agriculture, as well as the long-term consequences of climate change — for example, by building drought and flood defence systems that can help food-insecure communities to cope and adapt.
• Lastly, we must boost agricultural production and market efficiency. Roughly, a third of food shortages could, to a significant degree, be alleviated by improving local agricultural distribution networks and helping to better connect small farmers to markets. UN agencies, such as the Food and Agriculture Organisation and the International Fund for Agricultural Development, meanwhile, are working with the African Union and others to promote a “green revolution” in Africa by introducing vital science and technologies that offer permanent solutions for hunger.