13.04.2009

The Nation

• India lifts Azlan Sha trophy after a drought of 13 years
• Coming as it does after so long a time, this is a very good news.
• Till the 1980's India had been a force to reckon with in Hockey.  But somehow after the Moscow Olympics win, India's fortunes in this national sport have seen only a one way ride.  Down the hill.
• Let us hope it gets all the attention it deserves and much more than that -- that it will infuse lot of enthusiasm in our players to keep playing well.
• BTW India's Hockey captain is Sandeep Singh.  
• Highlights:
  
• India beat hosts Malaysia 3-1 .  Previous victories in 1985, 1991 & 1995 
  
• First title win abroad since 2003 in a major tournament, when India won Asia Cup in Kuala Lumpur.  Last title win in India was 2007 Asia Cup in Chennai 
  
• Sandeep Singh player of the tournament and also top goalscorer, hitting 6 out of India’s 12 goals 
  
• Player of the final: Arjun Halappa
  

Finance & Economy

• Price to book value ratio of many actively traded stocks is less than 1 for more than 50% of the actively traded stocks on Indian bourses
• What does this mean? This means that the market capitalisation of these companies is less than their net worth, or the stock market values them below the net value of their assets, presenting a great opportunity to investors. 
• The price-to-book value (P/B) ratio — derived by dividing the scrip price by its book value — is one of the most widely used valuation parameters for stocks. When this ratio is below one, it means that the market values the company below its net worth, making the stock undervalued. 
  
• When the P/B ratio of a stock falls below one, hypothetically, it means that if you buy the entire equity of the company and sell its assets in the market, you could make a profit. 

• Country's tax collections below par
  
• THE economic slowdown has taken its toll on the government’s tax collections, which have fallen short of even the revised lower target of Rs 6,27,949 crore for 2008-09 fiscal. This would push up the fiscal deficit further, which has been revised up to 6% in 2008-09 from 2.5% of GDP estimated earlier. 
  
• The government’s gross tax collection is likely to be about Rs 25,000 crore less than the revised target, with both direct and indirect tax collections bearing the brunt of slowing economic activity.
  
• A shortfall of about Rs 25,000 crore coupled with additional spending would widen the country’s fiscal deficit, which is excess of the government expenditure over total non-debt receipts, pegged at 6% in previous fiscal further by at least 1-1.5 percentage points. 

• An analysis of FDI inflows into India
  
• The aggregate inflow of foreign direct investment (FDI) has more than doubled in 2008 — up 113.3% from Rs 65,495 crore in 2007 to 139,725 crore last year. 
  
• The share of US in India’s total FDI inflow, has been declining steadily over the years. From about 11.5% in 2000, US’ share in India’s total FDI inflow has come down to only 5.4% last year. 
  
• Mauritius has become India’s biggest investment partner in the new millennium, replacing the US.  Its share in India’s aggregate FDI inflow has increased dramatically from about 19% in 2000 to 43.7% last year. Mauritius accounted for about half of India’s total FDI inflow in 2007. 
  
• Singapore, which had a less than 1% share in India’s FDI kitty in 2000, has become the second-biggest source of FDI in 2008.
  
• Cyprus: In 2008 it accounted for 4.2% of our total FDI approvals. Actual inflow from Cyprus has increased 164% last year from Rs 2,204 crore in 2007 to Rs 5,825 crore in 2008. 
  
• There are a number of new entrants as well. Israel, Thailand, Saudi Arabia and South Africa, whose names did not appear in the FDI list prior to economic liberalisation, have gone on to increase their stake steadily over the years. 
  

International

• It has long become fashion to reckon China as the saviour of the world economy.  Ruchir Sharma, one of the ET regulars and head of the emerging markets at Morgan Stanley Investment Management penned a very good and non-boring piece on the subject.  Some excerpts worth our noting:
  
• The Chinese market has been sensing a reversal in the economic downtrend for a while and that’s now being confirmed by the latest economic data. It seems Chinese economic activity reached a trough last November and has since been improving on a sequential basis. In March, the Purchasing Managers Index rose another 4.2% to 52.4%. A reading above 50 suggests that the manufacturing sector is expanding again, making China the first major country to record such a positive number since the global economy fell off a cliff last September. 
  
• Is it safe then to assume that the worst is behind us with China possibly taking over the pole position from the US in the global growth sweepstakes? Historical precedents for such a change in leadership include the late 1980s when the Japanese economy had become the biggest contributor to global growth and its stock market in 1989 accounted for half of the world’s market capitalisation. The subsequent steep decline of the Japanese market in the 1990s and a sharp deterioration in the country’s growth profile did not unravel the global economy because the US was able to lead the growth charge. 
  
• Unfortunately, the Chinese domestic market doesn’t yet possess the scale or the size to play the same decisive role in the global economy. China’s share in global economic output is less than 10% compared with more than 30% for the US. Furthermore, domestic consumption in China constitutes 40% of its GDP whereas US consumers’ contribution accounts for 70% of the economy. 
  
• At $3.5 trillion in size, China’s economy may not be large enough to independently chart a course for the world economy but it now has the critical mass and the ability to at least save the world from falling into an abyss. So when trying to figure out which way the global economy and markets are going to zig and zag, it makes sense to follow the movements of Chinese A share market as closely as those of the S&P500. 

Obituary

• Dr. Raja Chellaiah
• All of us have come across this name quite frequently in ET and other economics journals.  He passed away on April 7, 2009.
• An epitaph from an economics professor.
• Why do we refer such things?  Because when we are asked to say a few words about the contributions of a man whose name hogged the limelight, normally many of us grope for some details.  To save us from that trouble, there are some other living persons who can put it so neatly.