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from Global Investing:

Betting on (expensive and over-owned) Indian equities

How much juice is left in the Indian equity story? Mumbai's share index has raced to successive record highs and has gained 24 percent so far this year in dollar terms as investors have bought into Prime Minister Narendra Modi's reform promises.

Foreign investors have led the charge through this year, pouring billions of dollars into the market. Now locals are also joining the party - Indian retail investors who steered clear of the bourse for three years are trickling back in - they have been net investors for 3 months running and last month they purchased Rs 108 billion worth of shares, Citi analysts note. 

Foreigners meanwhile have been moving down the market cap scale, with their ownership of the top 100-500 ranked companies rising from 13% to 15% over the quarter. That's behind the broader BSE500 index's outperformance compared to the Nifty index, Citi said.

Citi earlier this month predicted another 3 percent gains for Indian stocks by year-end. Equity derivatives indicate that is feasible - stock exchange data shows foreign investors are loading up on call contracts on the Nifty index at the 8,000 point and 8,100 point levels -a call option gives its holder the right to buy the underlying cash shares.   The index is currently trading at 7,800 points.

from Breakingviews:

Euro zone’s biggest problem is debt, not slow growth

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Suppose that the euro zone economy was exactly the same as it is now, except that the ratio of sovereign debt to GDP was 9 percent instead of 92 percent. In that alternative reality, recent economic data would be depressing, but not worrying.

from Edward Hadas:

Why the global recovery is so slow

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The International Monetary Fund recently engaged in what has become an annual ritual. For the fourth year in a row, it reduced its forecast for world GDP growth. The 0.7 percentage point average decline from the earlier estimate to the new 3.4 percent growth projection is not huge, but the persistent disappointments make many economists uneasy.

from MacroScope:

Brazil’s economy: not as bad as it looked?

Brazil's President Rousseff looks on during a news conference to present the balance of the 2014 World Cup in Brasilia

Brazil's economy may have grown by 3 percent in 2012, three times as much as originally reported, according to an ongoing review of GDP data that could solve one of the biggest economic puzzles since the global financial crisis.

If accurate, estimates from local consultancy LCA would help explain why unemployment remained so low and consumer prices failed to ease when Latin America's economy looked so weak.

from MacroScope:

Juncker begins to fill in the gaps

juncker.jpg

European Commission president-elect Jean-Claude Juncker will hold talks with the various political groupings in the European Parliament as he seeks to develop policy positions. Most interesting would be indications about which way he is bending in the growth versus austerity debate.

Italy’s Matteo Renzi, resurgent after a strong performance in May’s EU elections, is pressing for a focus on measures to get the euro zone economy firing and has even managed to get Germany to talk the talk. But any leeway will be within the existing debt rules, not by writing new ones.

from MacroScope:

Balance tilted in Ukraine?

slaviansk.jpgUkrainian forces pushed pro-Russian rebels out of their stronghold of Slaviansk on Saturday. Its re-capture represents Kiev's most notable military victory in three months of fighting in which more than 200 Ukrainian troops have been killed as well as hundreds of civilians and rebels.

The regions of Donetsk and Luhansk are likely to be next in the government forces’ crosshairs.

from MacroScope:

Renzi and Schaeuble: Compare and contrast

renzi2.jpgItalian Prime Minister Matteo Renzi will spell out to the European Parliament his priorities for Italy’s six-month tenure of the EU presidency.
Emboldened by a strong showing in May’s EU elections, Renzi is pressing for a focus on growth rather than austerity and has even managed to get Germany to talk the talk.

At an EU summit last week, leaders accepted the need to allow member states extra time to consolidate their budgets as long as they pressed ahead with economic reforms. They pledged to make "best use" of the flexibility built into the bloc's fiscal rule book – not, you will notice, countenancing any change in the rules.

from MacroScope:

Clock ticking

Amid all the furore over David Cameron’s failure to block Jean-Claude Juncker for the top EU job at a summit last week, the bloc’s leaders signed a free-trade pact with Ukraine and said they could impose more sanctions on Russia unless rebels de-escalate in the east of the country by Monday.

In turn, Ukraine president Poroshenko extended a ceasefire by government forces until 10 p.m. local time today.

from Counterparties:

MORNING BID – To my brother Russell…

The index business is a big business, so it's not for nothing that the London Stock Exchange agreed on Thursday to buy Frank Russell Co and its Russell Indexes.

Those indexes are benchmarked to more than $5 trillion in index funds and puts the LSE in the third position behind S&P Dow Jones and MSCI in the ETF world as well, a lucrative business that involves using their well-known indexes like the Russell 2000 and its "value" and "growth" versions into a multitude of funds.

from Expert Zone:

Higher tax revenue from higher growth

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The 2013-14 budget got completely out of hand because of a whopping shortfall in tax revenue. Development outlays had to be drastically cut to manage the fiscal deficit.

The key to the budget is revenue. The ratio of gross tax revenue to GDP reached a high of 11.9 percent when GDP growth was at its peak of more than 9 percent in 2007-08. Since then, both declined and the ratio has been in the narrow range of 10-10.7 percent. GDP growth is a painless way of raising revenue.

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