Expert Zone

Straight from the Specialists

What if Greece exits the euro zone

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

While the idea of a Greek exit from the euro zone has long been rejected by politicians and deemed nothing more than a “tail risk” by most investors, there has been a clear shift in opinion after the Greek election in early May failed to form a new government. The repeat election on June 17 is therefore critical to the country’s future in the euro zone and to financial markets worldwide. If Greece fails to form a new government, or forms one that rejects its bailout plan with official creditors, the probability of an exit would rise significantly.

Aside from the election, bank runs could speed up Greece’s departure from the currency union. Greek banks are technically insolvent, as they have not been recapitalised since taking losses when the government restructured its debt last March. The 50 billion euros planned for their recapitalisation has not been released by the creditors — the IMF and European Union — and is, in fact, part of the same bailout plan that is on the line in the upcoming election.

Our baseline scenario is that Greece will not exit the euro zone within the next six months — we put this probability at 20 percent — as we believe both the Greek electorate and the creditors understand that the stakes of an immediate exit are too high. Still, investors have been asking how they should be positioned in case this 20-percent probability does occur. The key worry is contagion and the consequences of the Greek exit spilling over to other countries such as Portugal, Ireland, Italy and Spain.

India Market Weekahead – Brace for lows

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Equities reacted sharply due to continued concerns over the euro zone crisis and particularly Gross Domestic Product (GDP) growth numbers which were much below the most pessimistic forecast. Minor relief in the form of favourable opinion polls in Greece along with expectations for a policy stimulus in China to support growth failed to provide the necessary impetus to take the Nifty beyond the 5000 mark on a sustainable basis.

India Market Weekahead – Policy action, rupee to decide market direction

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The week gone by displayed indecisiveness by participants as the markets garnered small gains after moving in a tight range. The Nifty managed to hold on to the 4900 level mark as investors cheered the government’s announcement to raise petrol prices in an attempt to revive the policy inaction tag.

More joining the general insurance party in India

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Well, I don’t know if it should be called a party. But while there have been talks of a few exits (or shall we say strategic re-alignment) in the life insurance space, we have seen three new entrants in the general insurance space in the last few months.

Should the RBI delay a rate cut?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

With the return of inflation, there are doubts whether the Reserve Bank of India (RBI) will go in for the next cut in repo rate any time soon. In April, inflation was up at 7.2 percent, 2 percent more than in March.

India Market Weekahead – Time to start buying

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

May is typically a bear month for the stock markets as players often look to take advantage of the adage, ‘sell in May and go away’. Before going on vacation, I was expecting the markets to correct to levels of 5000/5050 but was pleasantly surprised to see the crack leading to around 4800 levels. All the negative factors compounded over the past few weeks gave momentum to the ‘sell’ sentiment which remained jittery over the fate of Greece after an inconclusive election.

Dark clouds hover as Indian parliament turns 60

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Despite the mounting criticism and steady loss of faith in democratic institutions and the many questions being raised by Indians about the personal integrity of those in public life, it was a proud moment for India when its parliament convened a special session on Sunday to mark the 60th anniversary of the first sitting of the Indian parliament on May 13, 1952. The luminaries at the time included Rajendra Prasad, S. Radhakrishnan, Jawaharlal Nehru, Sardar Patel and B.R. Ambedkar amongst others.

Slow death for push marketing of insurance?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

Just five of the 23 life insurance companies in India (I have excluded Edelweiss Tokio as they are new entrants) could increase their premium collection in 2011-2012 over the previous year. In fact, none of the top 10 premium collectors of 2010-2011 could increase their sales in 2011-2012. Why so?

How stable is South Asia 14 years after Pokhran II?

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

On May 11, 1998, India carried out a nuclear test and became a de facto nuclear weapon power. A few weeks later, Pakistan followed suit and demonstrated its own nuclear weapon capability. The covert nuclear weapon status of the South Asian region had become unambiguous. India had crossed the nuclear Rubicon after it had first signalled its technological ability to do so in May 1974 — with what was described as a Peaceful Nuclear Explosion (PNE).

Myanmar: The milestones ahead

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(The views expressed in this column are the author’s own and do not represent those of Reuters)

The latest craze amongst destinations for the diplomatic community globally seems to be Myanmar. The deluge started with Hillary Clinton flying down in November 2011. However, is all the enthusiasm, easing of sanctions and ambassadors being deputed going to enhance the avowed objective of the democratisation of Myanmar? Is there a possibility of reforms slowing down with too much being offered too early?

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