Expert Zone
Straight from the Specialists
Lower profits, uneasy market
(The views expressed in this column are the author’s own and do not represent those of Reuters)
On April 11, the CSO announced a further dip in industrial growth to 3.6 percent, bringing the Sensex down 189 points. That index was for February, the expectation about March is no better — which leaves the market a little cold.
The reasons for the dip are not all dismal. Possibly, the dip is mostly caused by what is generally called the base effect. Last year in February, growth had climbed to an unsustainable 15 percent. Even a good increase in production would have brought down y-o-y growth. The market is not unaware of this statistical illusion though a higher growth would have given greater comfort.
What is of concern is inflation. It pushed up cost more than price, putting pressure on margins. First, prices of industrial raw material (including agricultural raw materials, metals and petroleum products) were up in the Jan-March quarter by more than 20 percent y-o-y. These cost increases could not be wholly passed on. Surely, prices of manufacturers also increased. But that was less than the cost. Second, the sharp increase in interest payments which were about 15 percent of operating profits sliced off net profit.
What to expect from earnings season?
(The views expressed in this column are the author’s own and do not represent those of either Principal Pnb or Reuters)
The markets seem to be meandering in search of a push to move on in some direction.
Budget 2011: Good news for mutual fund industry?
(The views expressed in this column are the author’s own own and do not represent those of either Principal Pnb or Reuters)
When it comes to the mutual fund industry, the 2011-12 budget has good news and not so bad news.
Chinese investment in US: $2 trln and counting
(The views expressed in this column are the author’s own and do not represent those of Reuters)
If most members of Congress were asked how much China has invested in the U.S., they would respond with about $900 billion. This is a notable sum. Yet it’s too low by $1 trillion and possibly more. If many participants in financial markets were asked about Chinese investment in the U.S., they would fret over the possibility of disinvestment. This seems perfectly reasonable. At present, though, it’s essentially impossible.
More important than the yuan: Opening China’s capital account
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The entire global economy would benefit if the dollar-yuan exchange rate were driven by market demand. It would contribute to a U.S.-China economic relationship that is more balanced, more sustainable and more beneficial to people in both countries in a way that a government-ordered revaluation would not.
