Posts tagged 'India'

Why the RBI cut, charted

I don’t know what you want to call me. Santa Claus is what, eh, [journalist x] called me earlier. You want to call me a hawk.. I don’t know. I don’t go by these things. My name is Raghuram Rajan and I do what I do.

- The RBI governor, 29 September

And yes, that’s certainly A reason for why he cut the policy rate 50bps to 6.75 per cent on Tuesday, twice what had been expected.

Here’s another one, via Credit Suisse’s Neelkanth Mishra: Read more

Chup raho! You’re a non-performing asset

We don’t mean to keep banging on about it. But the bad loans in India’s banking system are both a significant barrier to a new, and badly needed, investment cycle getting properly underway — and a source of some hilarious numbers.

From Credit Suisse’s Ashish Gupta on the Reserve Bank of India (the regulator here): Read more

So you think you can bank? Indian public sector edition

Have a hypothetical on this joyous Ganesh Chaturthi

Let’s pretend you’re an Indian public sector banker. You and your ilk control about three-quarters of the country’s lending.

You know that stressed loans are an issue: Read more

India, private companies, monopolies and taxis

Here’s a paper from Dan Bogart at the University of Irvine about the East Indian Monopoly and why it was deemed justifiable to the British sovereign to grant all this power to a private company.

As the following extracts from the paper note, the rationale was largely as follows (emphasis ours): Read more

Aapka gold chahiye

Yes, as you can probably tell this is the news that India’s government wants to get the masses of idle gold lying dormant in vaults and households throughout the country out into the open.

To put that in Zerohedge-ese it’s the The Start Of India’s Gold Confiscation.

Or, to put it more simply… it’s a reasonable (if poorly executed) attempt to cut India’s crazy large (CA hurting) gold import bill by tapping into the estimated 22,000 MT of gold knocking around its temples etc. Read more

Of pampered Indian unicorns

Is this unique?

We rather doubt it.

From JP Morgan on India’s private sector start-up darlings and their publicly listed, markedly less-loved, counterparts (emphasis, theirs, ours and yours if you ask nicely): Read more

India: A billion shareholders now

There are lots of people in India. Nobody argues about that.

What’s also true is not many of them care about equities.

Of course, there are exceptions. In absolute terms, rather large exceptions. The Bombay Stock Exchange (founded in 1875 as the “The Native Share & Stock Brokers Association”) is Asia’s oldest and ever since Reliance founder Dhirubhai Ambani — the ‘guru of the equity cult’ as Hamish McDonald put it — tapped into India’s small investor to fund his company, they have been in the mix. Read more

India’s re-re-Modified markets

One really has to begin any talk of India’s stumbling stock market with a bucketload of context. After all, the Sensex is well up from Modi’s election almost exactly a year ago and the recent fall is from a record peak of just under 30,000 points in January.

Google Finance

As to why Indian markets are struggling this year, down 7 per cent from that peak… Read more

Hanging some of India’s public banks out to dry?

Evidence of a potentially large change in India’s banking system from Credit Suisse and Neelkanth Mishra’s India markets team:

Even within bank loans, which are losing share to bonds in corporate borrowing, [public sector, or PSU, banks] are losing share to private banks, being short of capital. In this environment, by allocating just Rs80 bn for PSU bank recapitalisation in the FY16E budget (half that of the previous year, and the lowest after FY10), the government has shown willingness to let PSU banks fall in relevance, and not perpetuate moral hazard by bailing out weak banks. This is a remarkable and unexpected change in stance, given the potential advantages in micro-managing three-fourths of the bank lending space in India.

And lo did the wails of certain politicians rent the sky. Read more

India: GDP growth rate up, confidence in statistics down?

Have a chart Credit Suisse’s Neelkanth Mishra put out back in 2013, the same Neelkanth Mishra who has been arguing persuasively that if “activity in informal industries and rural areas were properly measured, India’s GDP would look bigger and more stable”:

Standard deviation of reported quarterly GDP growth of India is second lowest only to China, you say? Read more

An Indian precedent for Switzerland

Switzerland’s “anyone can initiate a referendum if they’ve got enough signatures” society gets to vote on the “Save our Swiss gold” proposal this Sunday, which aims to make it compulsory for the Swiss Central Bank to hold at least 20 per cent of its assets in gold bullion and repatriate all Swiss gold that’s held abroad.

The proposal also plans to make it illegal for the SNB to sell any of the gold it accumulates. Ever.

What’s worth noting ahead of the poll, though, is how the naturally occurring phenomenon of “too many non-productive gold assets in our economy” has struck economies in the past. Read more

Coal India, winning by default

The Coalgate cancellation verdict is in.

India’s Supreme Court has decided to go ahead and annul all of the 218 coal licences handed out to businesses over the last two decades, bar a few belonging to state-backed companies.

Sucks for the private players on the receiving end (Jindal is off some 11 per cent at pixel) but apparently a win for Coal India:

It couldn’t have happened to a nicer behemoth.  Read more

India: A finite balance

For those who don’t know, India is a big, extremely uneven, place. From HSBC (with our emphasis):

India is a federation, with the central and state governments having both separate and shared responsibilities. While central government policies and transfers shape state policy agendas, states still have a relatively high degree of autonomy. As a result, state policies vary greatly.

The rise of India can be seen in each state, but in some more than others. Between the 1990s and 2000s a handful saw average growth rates jump significantly – Uttarakhand in the north (8.5ppts) and Bihar (5.1ppts), Sikkim (8.4ppts) and Nagaland (4.7ppts) in the east.

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King of good times a wilful defaulter, according to sources in the know

And if you don’t believe United Bank of India about the first bit, just browse through F1-owning drink mogul Vijay Mallya’s Twitter feed. Then remember he’s the pioneer of the in-no-way tasteless Kingfisher calendar.

(Do make your own here, if you must.)

Of course, being declared a wilful defaulter due to a failure to pay back loans associated with the grounded Kingfisher Airlines might crimp Mr Mallya’s style somewhat.

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India’s Coalgate, the winners and losers

Of course, everyone’s a winner when judgements start off with prose like this:

Coal is king and paramount Lord of industry is an old saying in the industrial world. Industrial greatness has been built up on coal by many countries. In India, coal is the most important indigenous energy resource and remains the dominant fuel for power generation and many industrial applications.

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Dealmaking from an Indian jail apparently not so easy

Sahara’s incarcerated “managing worker” Subrata Roy — who is in a scrap with regulators over $4bn worth of convertible bonds sold, oft to impoverished farmers, in 2008 — is after a dealroom at Delhi’s Tihar jail.

Can you blame him?

If you were sitting in jail waiting for a (roughly) $1.6bn bail to be posted while being given some 6hrs leave a day to negotiate the sale of of three trophy hotels, including the Grosvenor in London, the proceeds of which would go towards meeting that bail… wouldn’t you try to hunt down a little extra calm and negotiating space? Read more

Putting a floor under the Grosvenor in India

Some numbers to understand the Sahara group, India’s hotel-to-banks conglomerate:

Rs 10,000 crore (roughly $1.6bn): the amount Subrata Roy, he of the “empire built on the poor“, must pay in bail if he is to be let out of Delhi’s Tihar jail after a five month stay.

Roughly $1.6bn: the combined estimated values of Mayfair’s Grosvenor House Hotel and the Plaza and Dreams Downtown Hotels in New York, all owned by Sahara.

Six hours: the amount of time per day Roy will be let out of jail to negotiate sales of the group’s hotels once a concrete offer is made. Read more

In defence of cows as safe assets

You’ll remember this from last year, we’re sure:

Our main finding is that, on average, [rural Indian] households earn negative returns on their investments in cows and buffaloes if labor is valued at market wages: we estimate average returns of negative 64% and negative 39% for cows and buffaloes respectively. If we value the household’s own labor at zero, estimated average returns increase, to negative 6% for cows and positive 13% for buffaloes… if cows and buffaloes earn such low, even negative, economic returns, why would rural Indian households continue to invest in them?

That, from Anagol, Etang and Karlan, led to a host of speculation about various economic and cultural factors which might explain India’s ability to slide past the “central tenets of capitalism”… h/t’s to the Onion all round. Read more

India’s power deficit

Want to know why Modi is so focused on energy reform?

From Goldman’s Tushar Poddar and team: Read more

India: CILing me softly

A few questions for Coal India, 90 per cent owned by the Indian state, occasional target of UK hedge funds.

First, when you employ 370,000 highly unionised workers, how do you choose who gets to appear in the video of your corporate song?

And second, what’s the next step when your regulator says things like this?

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An Indian (banks) fig leaf

UK Financial Investments Limited as a role model? An institution that’s supposedly become “subjugated to politics”?

We suppose it depends on your starting position. And if your starting position is in front of India’s state-backed banks, well…

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What if Modi’s a tease?

When your bet is on policy certainty in India, maybe it’s time to reevaluate that bet…. From BofAML:

Ignoring the risk-love silliness, we think this means a whole load of policy certainty has been priced into Indian markets ahead of the Modi-led BJP’s presumed victory in the just finished elections. From BofAML again: Read more

Yeah, Indian exit polls are pretty dodgy…

Compare, from Nomura:

We’d like to preface this by stating that exit polls have had a patchy record in calling election results correctly in the previous two elections. Exit polls in 2004 and 2009 were proven wrong. However, we note that even if NDA achieves a 15% lower seat count than the average prediction of 285 seats, it would still place it in a comfortable position to form the government.

Contrast, from Eurasia Group:

In the last Lok Sabha election, in 2009, for example, exit polls overestimated the performance of the BJP and its allies by 4-25% while underestimating the Congress’s tally by 22-42%. Similarly, 2004 exit polls were off by a range of 22-53% for the BJP and allies’ total and missed the mark for Congress’s performance by 8-40%.

Hmmm. Read more

The Lok Sabha of dreams

If we come, will they build it? Here’s the Indian economy charted, by Citi:

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The good, the bad and the ugly of India’s election: cut out and keep edition

If you’re short the rupee* the past few months have been uncomfortable.

Not only have (somewhat dodgy) Indian polling data pointed consistently to a stable BJP government being formed after elections which started this week, but India has also managed to get its macro house into some sort of order.

From Goldman, for example: Read more

Caption competition, Narendra Modi edition

Giant Assamese hat or controversial new RSS uniform? Either way we doubt it’ll distract from the opposition BJP’s failure to publish its manifesto on Thursday. Voting starts on April 7, btw. Read more

The better angels of India’s nature

From BoFAML:

The Institute for Conflict Management has reported that total deaths in terrorism-related violence – including civilians, security personnel and terrorists – have fallen to 885 in 2013 from 5839 in 2001 (Chart 9). Not surprisingly, higher growth is cooling violence. Fatalities are also falling in each of India’s three key theaters of conflict: cross-border terrorism, Maoist rebellion and insurgency in the North East (Chart 10).

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Raghuram ‘Volcker’ Rajan… good luck with that

“If you do a Volcker, you kill the supply side, and then you are in a bad situation,” Mr Rajan said during an interview in November. Erm…

If inflation truly is public enemy number one, then Indians at last have someone who may be up to the task. Step forward Raghuram Rajan, a few months into the role of central bank governor and India’s could-be Paul Volcker.

Awkward. But it’s his own fault. Read more

India in thrall to not so dead economists (part two)

Worrying imagery aside, the comparisons between Narendra Modi and either Thatcher or Reagan stand up to at least some scrutiny. And, as we mentioned in a previous post, the intellectual ballast of India’s potential next leader may well be provided by two of India’s more ‘pro-growth’ sons — Jagdish Bhagwati and Arvind Panagariya. Read more