02.04.2008

• UBS writes off $19 bn more
• You know UBS is one of the biggest banks in the world? Perhaps it is the biggest bank. (Need to check on this one though) It is a Switzerland based bank.
• It took a fresh loss of $19 bn on its risky assets i.e., US real estate and related structured credit positions. This brings the total suffered by it so far on this count to $37 bn. This is perhaps the largest loss suffered by any bank on this account.
• Consequently, the Chairman of the bank tendered his resignation.
• IPOs may get underwriting shield
• SEBI is considering making underwriting of IPOs mandatory as part of its efforts to discipline the primary market and ensure that quality papers are available for the investors.
• BTW, what is underwriting? The underwriter to the issue enters into agreement to subscribe to or procure subscription for the issue that remains unsubscribed at the close of the offer period.
• The consequence of SEBI’s move would be that the issue expenses will rise as there will be underwriting fee.
• But the benefit for the investors is that they can have confidence that knowledgeable people have decided to back the issue. It could also help obtain better pricing as institutions would not want to underwrite issues that are aggressively priced.
• Telecom companies to share active infrastructure
• The government of India finally approved this proposal from TRAI.
• This will bring down the cost of overall expenditure for telecom companies by over 50% and help reduce tariffs further.
• So far, telecom companies are permitted to share only passive infrastructure such as towers, repeaters, shelters and generators.
• Active infrastructure includes key electronic components like antennas, feeder cables, nodes, radio access network, transmission systems and backhaul.
• WiMax and WiFi in layman’s terms
• WiFi is usually thought as the enabling technology for connecting devices indoors, while WiMax is considered the enabling technology for connecting over long distances. WiMax range at present is a great way to connect sparsely populated areas. Its actual coverage is about 1 to 1.5 km in very densely populated areas to about 10 to 12 km in others.
• But Intel has announced a new technology that enables WiFi to give service up to 60 miles.
• Experts say that quality of service is guaranteed with WiMax but not with WiFi.
• This is one more area where technological developments will keep fighting with each other. Let us await the result of their brawl.
• Getting water from air!!
• It definitely is a novel way of doing things.
• A Chennai based company has come up with a device which draws in atmospheric air and makes a little rain by reducing its temperature. When moisture particles get heavy and drop, they are collected and filtered and given as drinking water.
• The machine works best when the temperature is around 25 to 32 degrees Celsius and the humidity is between 60% and 70%. The machine provides pure drinking water while preserving the ground water level.
• The machines are reportedly producing water at a cost of less than Rs. 1 per litre.
• Now, will the doomsday sayer environmentalists be targeting this technology also? Anything is possible. But let us give a leg up to this technology. I would recommend a Nobel prize for such a device. If the machines work as they are reported, it is a real manna from heaven.
• Remember the debate about decoupling theory?
• Alok Sheel, one of my favourite writers (and a civil servant) wrote a very good piece in today’s ET. Worth a read. Please do so here.
• He argues that decoupling theory is not convincing. Take a look at to know the how and why of it.
• On derivative trades
• One more very good article that appeared in today’s ET is about the legality of derivative transactions. We have been noting about the issue for the last couple of days.
• Umarji’s article on the subject is a compelling read. Couldn’t write a précis of this. Very good read. Do so here.
• Ketan Parekh and 3 others get one year rigorous imprisonment for the 1992 stock market scam
• The offence for which they are now sentenced is about misappropriation of Rs. 47 crore belonging to Canfina, the then non-banking financial arm of the Canara Bank.
• The brokers in connivance with the top echelons of Canfina have arranged for bogus ready forward transactions between Canfina and Canbank Mutual Fund during October 1991 to January 1992. A ready forward transaction is one where one party sells securities to another for a certain amount and agrees to buy those securities back at a slightly higher price at a pre-decided date in the future.
• What happened in the scam is that the funds to be exchanged in the ready forward deal did not reach the seller; instead they found their way into the brokers’ accounts. The brokers played the market and ultimately returned them to the seller. But even that is an offence and hence they were all booked and sentenced.