Prior to the financial crisis, India's annual growth rate of about 9 percent seemed positively moribund next to China's double-digit economic expansion. But purely on demographics, the dimming power of the US consumer could give India an edge over its neighbour in the longer run.

That's what India's trade minister Anand Sharma seemed to suggest last week when he reminded the audience at a London conference that the country had "20 percent of the world's children":

We know that when we talk about emerging countries the consumption patterns are different. Most of China's production is meant for (markets) abroad. India consumes two-thirds of what India produces.

Indeed, Goldman Sachs projects that India's middle class will outstrip China's by 2045. This is some 15 years after half of China's population becomes either too old or too young to be part of the workforce.

Beijing's mandarins are taking note of this monumental shift in dependency ratios. After decades of enforcing a 'one-child' policy in the face of an human rights outcry, China appears to be relaxing its stance on population control. Family-planning officials in Shanghai have begun to urge eligible couples to have two children.

BlackRock Asian equities portfolio manager Jing Ning says it's useful for investors to start thinking about this demographic shift. Healthcare providers, for instance, will look increasingly attractive investments.

"For the next 20 years, it will be critical for the government to reform its social welfare system," she said.

Well, research carried out by Datamonitor suggests a similar divergence between British consumer perception and behaviour during the current economic downturn.

The survey found that 90 percent of UK consumers believed that the country was in the grip of recession but slightly over half of them (53 percent) said their household finances have either improved or stayed the same. Similarly, twice as many people feel their job is safe as those who have actually lost or fear they will lose their jobs.

"In the majority of households there does not appear to have been any significant increase in financial strain that results in consumers displaying recessionary behavior,"

"On the contrary, only 8 percent globally think that their household's general financial situation has worsened significantly since before the downturn, and thousands have actually benefitted from reduced mortgage repayments, for example."

Datamonitor said the UK could be in the grip of a "psychological recession", adding that the term was not meant to trivialise the economic contraction but to illustrate that the knee-jerk psychological reactions of consumers to the threat of recession were "primarily responsible for the perpetuation of the recession."

Its solution is to...well, look on the bright side.

"The communication of positive messages through the government, the media and the banking industry is what is needed to facilitate a psychological shift and confidence boost amongst consumers, bringing about a 'Psychological Recovery.”

(An earlier version of this post incorrectly said that Friends Provident had commissioned the Datamonitor survey)

Is diversity of opinion boon or bane for Islamic finance?

Market participants gathered for a conference at Thomson Reuters’ London headquarters earlier this week discussed the need for more convergence in the industry estimated to be worth $1 trillion.

Of particular focus was the role of sharia scholars who rule on whether investment products are in line with Islamic teachings.

“Sharia scholars who sit as advisers have a crucial role to play in retaining public confidence,” Rifaat Ahmed Abdel Karim, secretary general of the Islamic Financial Services Board, an international standards-setting body for the industry, told the forum.

Beyond commonly agreed principles such as the emphasis on shared profit and the prohibition on usury, divergent opinion has emerged among these scholars on issues ranging from financial derivatives and deferred payment contracts.

Last year, the issuance of sukuk or Islamic bonds was hit when the top scholar of an influential industry body declared that about 85 percent of sukuk was un-Islamic.

“(In this case), the market was kept in the dark, unaware of how to respond. The industry needs a sharia governance system that is reliable and effective,” said Karim.

But whether authorities can or indeed, should, move towards some common regulatory ground remains to be seen.

One sharia fund manager I spoke to pointed out that diversity of opinion is seen as a blessing within Muslim tradition.

“Even when it comes to religious customs, there are differing Muslim interpretations, so I don’t see how this would be any different," he said.

"We accept that the FSA (Financial Services Authority) in the UK and the SEC (Securities and Exchange Commission) in the U.S. are different regulatory regimes so why can’t we accept this in Islamic finance as well?”

]]> http://blogs.reuters.com/globalinvesting/?p=2464/feed/ http://blogs.reuters.com/macroscope/?p=1671 http://blogs.reuters.com/macroscope/?p=1671#comments Wed, 15 Jul 2009 13:34:55 +0000 Sebastian Tong http://blogs.reuters.com/macroscope/?p=1671 [CROSSPOST blog: 43 post: 1671]

Original Post Text:
Time was when a British education had a cachet, especially among Britain's far-flung colonial territories.

But could the prestige of even a Cambridge or Oxford degree be a little dulled in these parlous days for the British economy, now labouring under massive public debt and a decade-high unemployment rate?

That appears to be the case in the former British colony of Singapore, whose rapid economic development since independence in 1965 has seen it accumulate hundreds of billions of dollars in reserves and attain a GDP per capita on par with Italy.

The city-state's newest opposition politician Kenneth Jeyaretnam has complained that the Singapore press -- often accused giving more favorable coverage to the ruling party -- has been referring to him as a "British-trained economist".

Jeyaretnam, like many members of Singapore's political establishment -- including the country's first prime minister and current prime minister -- went to Cambridge.

"I wonder why I have never read in the Singapore press, British-trained mathematician prime minister Lee Hsien Loong or British trained-lawyer, Minister Mentor Lee Kuan Yew," Jeyaretnam said in a speech to the Singapore Foreign Correspondents Association earlier this month.

"Naturally I suspect that the mainstream media want to light up a subliminal marker in the people’s minds that a) I’m a foreigner and b) that my economics is suspiciously left-wing because it’s from a country associated with economic failure and the welfare state."

Ouch.

But could the prestige of even a Cambridge or Oxford degree be a little dulled in these parlous days for the British economy, now labouring under massive public debt and a decade-high unemployment rate?

That appears to be the case in the former British colony of Singapore, whose rapid economic development since independence in 1965 has seen it accumulate hundreds of billions of dollars in reserves and attain a GDP per capita on par with Italy.

The city-state's newest opposition politician Kenneth Jeyaretnam has complained that the Singapore press -- often accused giving more favorable coverage to the ruling party -- has been referring to him as a "British-trained economist".

Jeyaretnam, like many members of Singapore's political establishment -- including the country's first prime minister and current prime minister -- went to Cambridge.

"I wonder why I have never read in the Singapore press, British-trained mathematician prime minister Lee Hsien Loong or British trained-lawyer, Minister Mentor Lee Kuan Yew," Jeyaretnam said in a speech to the Singapore Foreign Correspondents Association earlier this month.

"Naturally I suspect that the mainstream media want to light up a subliminal marker in the people’s minds that a) I’m a foreigner and b) that my economics is suspiciously left-wing because it’s from a country associated with economic failure and the welfare state."

Ouch.

Speaking at a Nomura investors forum, Darby said a chance sighting of a shark on Sydney's famed Bondi Beach three weeks ago made him realise that prices of grain and other soft commodities -- punished of late by global recession fears -- could be due for a rebound.

"I actually saw a shark on Bondi Beach and that made me wonder about the impact of La Nina and how there's a severe drought around the world at a time when many farmers are finding it hard to access credit," said the Hong Kong-based analyst.

The La Nina meteorological phenomenon has been blamed for bringing deep ocean creatures -- such as sharks -- closer to shore and also for a long-running drought that has hit farmers in Australia, China and North America.

Persistent drought could push food prices higher, potentially benefitting soft commodity-producing economies from Vietnam to Ukraine, Darby said.

"This is one area that could disrupt the picture of global deflation that bond markets have," he said.

Before the Mass on Saturday, Castrillon Hoyos met four journalists (myself included) to explain why Pope Benedict decided last year to promote wider use of the old Latin Mass. He praised the traditional Tridentine rite for its "power of silence," an element of contemplation he said had disappeared from worship since the liturgical reforms of the 1960s. If his pre-Mass briefing is anything to go by, however, the Latin Mass also has a power to raise the decibel level among Catholics in Britain.

The Colombian-born cardinal, who is head of the pontifical commission Ecclesia Dei for relations with traditionalists, said the new form of the Mass had led to "abuses" that had prompted many to abandon the Church. So, he said, the pope wanted the older form to be offered again in all parishes (not only where a group of parishioners requested it, as originally said).

"The experience of these 40 years has not always been so good. Many people abandoned the sense of adoration (of God)...There is (now) an atmosphere that makes it possible for these abuses and that atmosphere must be changed," he said in English. "It is not a matter of confrontation but of dialogue -- fraternal dialogue -- making efforts to understand the precious things contained in the new and the old rites."

The cardinal added that Pope Benedict would soon clarify his motu proprio -- the decree allowing wider use of the old Mass -- to clear up confusion over issues ranging from the differences between liturgical calendars of the old and new rites, the use of vestments, ordinations to the sub-diaconate and the Eucharistic fast.

How polarising this issue can be within the Church was apparent even in that small group during the 45-minute interview.

Elena Curti, deputy editor of the Catholic magazine The Tablet, said many Catholics like herself were confused at the new emphasis on the old rite. It seemed to diminish the role of the laity, she said, and she asked the cardinal if this was a regression from the reforms of the Second Vatican Council of 1962-1965. The cardinal said no: "The Holy Father is not returning to the past but taking from the past a treasure to make it present today along side the richness of the new rite."

Curti's comments sparked a declaration from Damian Thompson, Daily Telegraph religion reporter and editor-in-chief of the Catholic Herald, that he "deplored" her comments.

"I'd like to very strongly distance myself from what Elena has said and to say that there is tremendous enthusiasm among younger Catholics for the motu proprio, that many Catholics are deeply grateful to the Holy Father for making the change and many younger Catholics regard this as an extremely exciting development," Thompson said to the cardinal.

John Medlin, General Manager of the Latin Mass Society that organised the Mass and the briefing, felt obliged to intervene and ask for "charity around the table." Thompson (pictured at left) kept up the same tone in his two reports on the meeting -- "Latin Mass to return to England and Wales" and "Victory against the sandalistas" -- and on his blog Holy Smoke (with partial transcript of the briefing). Since The Tablet is a weekly, we'll have to wait until Friday to see what Curti writes.

The revival of the Old Latin Mass has been compared to a cultural revolution within the Catholic Church. It looks like it's off to a rousing start.