Export Pessimism – Louth Online http://louthonline.com/ Thu, 30 Jun 2022 20:40:16 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 http://louthonline.com/wp-content/uploads/2021/03/louthonline-icon-70x70.png Export Pessimism – Louth Online http://louthonline.com/ 32 32 Bull Market: 5 Sectors Could Lead The Next Bull Market, According To Top Value Investor S Naren http://louthonline.com/bull-market-5-sectors-could-lead-the-next-bull-market-according-to-top-value-investor-s-naren/ Thu, 30 Jun 2022 04:41:00 +0000 http://louthonline.com/bull-market-5-sectors-could-lead-the-next-bull-market-according-to-top-value-investor-s-naren/ S NaranManaging Director and IT Director, ICICI Prudential AMC says domestic cyclicals like banks, autos, infrastructure, cement, capital goods could lead the next bull market on Dalal Street. “Banking and automotive are the sectors that seem attractive. Both have gone through a difficult phase over the past four years and are now ready to take advantage of the opening of the economy,” says the top fund manager in an interview with ETMarkets. Edited excerpts

Your asset allocation fund managed to protect the short term downside and beat Nifty in the long term. Can you explain how you go about rebalancing stocks, debt and gold through market cycles?
Allocation/rebalancing between equity and debt mutual funds is based on an internal valuation model. Besides the model, we also look at the opportunities available in the debt market. Here, the plan has the option to allocate 0-100% to equity or debt depending on the valuation model. The model exhibits the principles of buying low, selling high by increasing equity exposure when markets have fallen and vice versa. The gold allocation is also actively managed. The goal of the program is asset allocation based on disciplined valuation, which ensures a smoother investor experience and long-term wealth creation. As of May 31, the allocation to equities, debt and gold was 33%, 56% and 11% respectively.

What do your valuation models tell you about asset allocation today? What weighting do you place on equities after the recent correction?

The Equity Valuation Index indicates that overall market valuations have moderated from their recent peak amid growing global uncertainty. In line with our asset allocation model, we have increased the equity exposure of our asset allocation fund to 33% as of May 31, 2022, from 19.8% as of January 31, 2022.

Do you think we are in a bear market or is this just a correction in the bull run that started after the pandemic induced crash?

The bull market we had experienced over the past two years was largely due to monetary policy measures initiated by global central banks. Currently, we are in the midst of a cycle of rising interest rates (driven by global central banks) that could lead to lower global economic growth and as such equity markets are expected to remain volatile.

Back to recommendation stories



When would you find valuations attractive enough to overweight equities as an asset class? Maybe when Nifty hits 13,000 or 14,000?

Although India remains one of the most structural markets in the world, the near-term outlook looks uncertain and volatile due to US rate tightening. The US Fed is expected to continue raising rates through September, and we believe inflation and interest rate concerns may begin to subside by then. In the meantime, investors should focus on asset allocation. Due to the recent correction, valuations in several pockets of the market have become much more attractive than they were six months ago. We prefer large caps to small and mid caps at the moment. As part of the asset allocation process and based on our internal equity valuation model, we regularly increase our equity allocation across all of our asset allocation schemes.

Speaking of sectors, are you finding enough bottom fishing opportunities in banks and IT stocks?

Banks and automotive are the sectors that seem attractive. Both have gone through a difficult phase over the past four years and are now ready to take advantage of the opening of the economy. When it comes to tech companies, India’s IT sector is closely tracking US corporate earnings, which look weak for the next couple of quarters.

As we enter a new bullish phase, which sectors do you think will lead the next leg of the rally?

We believe that manufacturing as a sector should do well over the next decade. Domestic cyclicals like banks, autos, infrastructure, cement, capital goods could lead the next rally in our view. Rupee depreciation will also support export-oriented sectors like IT and pharmaceuticals.

What is your vision of gold? Why is it not efficient?
We are positive on gold and believe investors can consider a 10% allocation to gold ETFs/FoFs in their portfolio. Gold is considered a safe-haven asset class during economic downturns. It also performs well in an inflationary scenario. Over the past 15 years, global debt has soared to $300 trillion and global equity values ​​have risen sharply to $100 trillion. Meanwhile, total global gold is currently valued at $3 trillion, which is tiny compared to total global debt and equity levels. So even if there is a small global shift from debt/equity to gold, gold prices could significantly outperform.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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My generation is responsible for the fact that we are at war with nature,” said UN chief António Guterres. http://louthonline.com/my-generation-is-responsible-for-the-fact-that-we-are-at-war-with-nature-said-un-chief-antonio-guterres/ Tue, 28 Jun 2022 16:56:24 +0000 http://louthonline.com/my-generation-is-responsible-for-the-fact-that-we-are-at-war-with-nature-said-un-chief-antonio-guterres/

The war in Ukraine is not only creating global economic turmoil, but also threatening international efforts to combat climate change, according to United Nations Secretary-General Antonio Guterres.

The UN chief spoke to Euronews on the sidelines of the five-day UN ocean conference in Lisbon. More than 7,000 participants descended on the Portuguese capital to take part in the Ocean Summit. With the message ‘Save our ocean, protect our future’, the rally aims to serve as a call to action for policy makers to reverse the decline in ocean health.

Asked how the fight against climate change could be put back at the top of the international agenda, António Guterres told Sérgio Ferreira de Almeida of Euronews that it was about raising the issue as much as possible on all foreheads.

“If you look at the war in Ukraine, the war in Ukraine shows how important it would have been if, over the last decades, we had invested heavily in renewable energy. If that had happened, we would not be today. at the mercy of the fossil fuel industry today with extremely high prices, as you know, which undermine people’s quality of life and undermine the situation of many developing countries. So if the war in Ukraine shows any thing, [it] is that we have to accelerate the green transition, which means that we have to fight climate change much more effectively.”

Guterres also called the countries’ recent decision to accelerate investment in fossil fuels a suicide.

“It’s suicide and I hope people will understand that suicide isn’t exactly the best way to face the future.”

Global food security

On the issue of global food security and access to the Black Sea, the Secretary-General insists that the UN is working hard to broker an agreement between Russia and Ukraine with the help of Turkey to allow the export of Ukrainian grain from its ports.

“As for access from Ukrainian ports, that is exactly what the UN plan is aiming for, which was presented to the Russians, to the Ukrainians, with the support of Turkey and we hope it will be soon possible to have a meeting of the four in Istanbul, on the basis of the various consultations which have been held, particularly at the bilateral level by the military of these three countries, we hope that it will be possible to reach an agreement allowing the export of Ukrainian grain. at the same time, that international countries should facilitate the export of Russian foodstuffs and fertilizers, since it is true that there are no sanctions applied to foodstuffs and fertilizers, but there are complexities in terms of shipping, insurance, payments that need to be resolved and that is why we have been in close contact with the European Union, with the United States and with Russia in order to be able to reach a global agreement as well foreseeing access of Ukrainian and Russian food products and fertilizers to world markets.”

On the opening day of the Ocean Conference, António Guterres warned that coastal ecosystems are dying because of the climate crisis and called on countries to do more to tackle ocean plastic pollution. He also apologized to the world’s younger generations, blaming his own generation for the environmental crisis the world is currently facing.

“My generation is responsible for the fact that we are at war with nature, that we have climate change, that the situation is not under control. We should reduce emissions considerably in recent decades. And the forecasts, based on the current commitments of Member States around the world, would still represent an increase in emissions in 2030, which is suicidal, totally unacceptable.And in relation to the oceans, we are still losing the battle to preserve our oceans, in relation to to the [warming] and acidity caused by climate change, coral loss, biodiversity loss, overfishing, plastic pollution, other forms of [toxin] pollution that makes several coastal areas totally lifeless. I mean, we are still losing the battle to preserve the oceans and that needs to be reversed. My generation, in fact, was unable or unwilling to detect when it was necessary to detect that the situation was spiraling out of control.”

Asked about his hopes for the future and whether he remains optimistic about solving the climate crisis before it’s too late, Guterres said.

“It is not a question of optimism or pessimism. I am determined to do my utmost to become world leaders in politics, but also in the economic sector… let us not forget that the fuel industry fossils has spent billions and billions for decades with pseudoscience and with public relations and all kinds of lobbying trying to convince the world that climate change wasn’t that bad and that fossil fuels weren’t creating the problems that they create. A bit like the tobacco industry did a few decades ago. . So the economic leaders also have a huge responsibility. And all of them, the political leaders, the economic leaders must understand that we are in a emergency situation and that this emergency requires drastic measures.

_To watch the full interview, click on the video player above_

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Ex-rich NFT shoppers party in pain http://louthonline.com/ex-rich-nft-shoppers-party-in-pain/ Sun, 26 Jun 2022 01:05:02 +0000 http://louthonline.com/ex-rich-nft-shoppers-party-in-pain/

Welcome back to Chain reaction.

Last week we talked about endless pessimism in the crypto markets. This week we’re talking about parties, tattoos, booze and fun.

If you’d like to receive this in your inbox every Thursday, you can sign up on TechCrunch’s newsletter page.

Exit opportunity

It’s no secret at this point that many onlookers are watching the crypto crash with glee, laughing as tokens plummet and NFT volumes dwindle. The crypto industry has managed to make many consumer haters throughout this bull run – with detractors pointing to the aggressive use of energy, the addictive profile of crypto investing, and the way whose NFTs have become “MLMs for guys” – as justifications for their disgust.

As the bull market winds down, there’s probably a good time here for some soul-searching on how investors’ Web3 vision for the web may give consumers more excitement than skepticism, but something tells me that the crypto industry is about to become more insular. than ever.

This week, NFT locals descended on Times Square in New York City. Expensive images found their way onto the massive advertising screens, coin-operated parties flourished, and a host of suddenly less wealthy collectors found a way to sympathize and double down. My co-host Anita had the chance to visit NFT NYC in person and offered some thoughts below, but in some ways the positive vibes showcase an industry shifting from growth mode to survival mode.

The version of NFT World Survival is of course a bit different. At the event this week, the Bored Ape Yacht Club hosted a festival with Future, LCD Soundsystem and Amy Schumer. Tame Impala headlined Kevin Rose’s Moonbirds event where token holders could get owl tattoos onsite. The NYPD has dismantled tokenized NFT parties. One project hired dozens of protesters holding signs saying “God hates NFTs” to stand outside their event. An NFT startup hired a Snoop Dogg impersonator “Doop Snogg” to walk around their event as a pseudo tacit endorsement.

Ultimately, it’s no secret that the NFT market was filled with a lot of bullshit, and any bear market could and should restore some sanity to what’s left, but the lines seem a little blurry in the NFT countries.

In some ways, it feels like the wealthy collectors of the NFT space are jettisoning into space as the world they’ve built prepares for collapse. So-called blue-chip projects with 10+ ETH floors, VC funding, and large trading volumes have shown surprising resilience in the face of the downturn despite falling values ​​of underserved cryptocurrencies. underlyings on which they are based, but NFT project floors across the board have taken major hits as less wealthy collectors seek exit cash where they can, struggling to the bitter end.

the last module

We kicked off this week’s episode by unpacking a controversy sparked by none other than the Dogefather himself – Elon Musk. Musk and his companies, SpaceX and Tesla, are being sued by a Dogecoin holder for allegedly inflating the value of the cryptocurrency, which has since crashed.

It’s time for NFT NYC this week, a crypto conference that has drawn influencers, investors, celebrities and others to New York (more below from Anita, who traveled the city to talk to the NFT community). We took a deep dive into the NFT market itself and what might be driving the apparent exuberance of the NFT space, even in such dire market conditions for crypto and technology in general. We ended this week’s news with two DAO-related disasters that may not bode well for the future of this recently fashionable, but undeniably messy governance structure.

Music and visual artist Latasha joined us on the podcast this week to talk about how NFTs have helped her claim ownership of her creative work and make a living from it. She shared her vision behind Zoratopia, a festival experience she hosted at crypto events across the US, in her role as Community Leader on the NFT Zora platform.

Subscribe to Chain Reaction on Apple, Spotify or your alternative podcast platform of choice to follow us weekly.

follow the money

Where startup money is moving in the crypto world:

  1. FalconXa digital asset platform for institutional investors, announced a $150 million Series D funding round at an $8 billion valuation led by GIC and B Capital.

  2. NFT Collectibles Project doodles attracted an undisclosed amount of funding from Alexis Ohanian’s Seven Seven Six.

  3. NFT marketplace based in Solana magic eden raised $130 million in a Series B funding round co-led by Electric Capital and Greylock Partners, bringing its valuation to $1.6 billion.

  4. Main Trusta crypto and fintech infrastructure startup, landed $100 million for its Series B from investors including FIS, Fin Capital, and Kraken Ventures.

  5. Permissionless Margin Trading Protocol OpenLeverage landed a strategic investment of an undisclosed size from Binance Labs.

  6. NFT-Based Meme & Comedy Tool Company terrible petsa project by the producers of the Silicon Valley TV show, raised approximately $4 million in funding led by First Round Capital, XYZ Capital and Moment.

  7. Astariaan NFT liquidity provider, closed an $8 million seed round from investors including True Ventures and Arrington Capital.

  8. End statea sneaker-focused NFT platform, provided $5.5 million in seed funding to investors including Archetype and Castle Island.

  9. Algorithmic exchange rate protocol Increment raised $1.56 million for its fundraising round led by ParaFi.

  10. Afropolitan raised $2.1m in pre-seed funding from Balaji Srinivasan and other investors to build a digital nation-state for Africans and the African Diaspora.

this week in web3

Hey, this is Anita here, reporting (almost) live from NFT NYC this week. Everyone who lives in Manhattan, myself included, has been surrounded by a deluge of elated degenerates who rejected this week’s recession. You can listen to this week’s podcast to hear my thoughts on all of this, but I want to address a different question here: Does the crypto community practice what it preaches?

There were tons of complaints on Twitter from people who waited in line for hours to get their NFT NYC pass. Even those speaking on the signs had to line up with everyone attending the event, they told me, which apparently took place around three city blocks.

I’ve lived in New York for a while now, so I’m not easily rattled by a long line, but it got me thinking about the irony of the whole thing. NFTs and their associated technology can provide easy authentication and identity verification. NFT stans love to cite the example of events as a primary use case for the technology, which they believe could make administrative burdens such as registering people for a conference much more efficient. So where is this technology at this week’s conference?

I’m sure organizing a crypto event involves creating order out of chaos in a way that’s way beyond my own abilities, so I wasn’t singling out NFT NYC organizers or anyone else. other in particular. But the NFT NYC lines raised a bigger question in my mind about the contradiction between what the crypto community said is the future relative to how the crypto community actually behaves. For example, why are in-person conferences so important for getting to know people on the Web3? Shouldn’t we all be past the point where we have to breathe each other’s air to feel a human connection?

From what I’ve heard over the past year from much of the Web3 community, I would have expected us all to be hanging out with our best friends in the metaverse 24/7 and 7 days a week. The crypto conferences themselves, it seems, present a huge opportunity for web3 enthusiasts to take advantage of the technology they believe will change everything about the way we live. So far, it seems this opportunity has been largely overlooked.

TC+ analysis

Here are some of the crypto analyzes from this week that you can read on our TC+ subscription service (written by TC’s Jacquelyn Melinek):

Crypto’s focus on community could knock subscribers off a cliff
The idea of ​​the “family” culture that so many companies advocate seeps deeper into the world of crypto as communities form from a sometimes toxic and bigoted position to relentlessly support the projects in which they invest. Don’t get me wrong, some parts of the crypto community are great – I’m part of a few communities myself – but when misused it can lead the blind to lead the blind.

Crypto Founders Face Falling Valuations, Make Deals Amid Market Volatility
As the crypto market continues to crash, founders in the space are struggling to retain investors who are now trying to minimize their risk and pull out of funding rounds. The market is moving towards a venture capital-friendly landscape, but not all founders are happy with how they’re being treated now that investors are back in the driver’s seat.

Thanks for reading, and again, if you want to have this in your inbox every Thursday, you can sign up on TechCrunch’s newsletter page. See you next week!

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UK-GCC trade deal could be done within a year, minister says http://louthonline.com/uk-gcc-trade-deal-could-be-done-within-a-year-minister-says/ Fri, 24 Jun 2022 11:12:42 +0000 http://louthonline.com/uk-gcc-trade-deal-could-be-done-within-a-year-minister-says/

NEW YORK (Reuters) – Oil prices fell more than $2 a barrel on Thursday in volatile trading as investors weighed the risk that rising U.S. interest rates could trigger a recession and reduce demand for fuel .

Brent crude futures fell 2.26 cents, or 2%, to $109.48 at 1:04 p.m. ET (1704 GMT). U.S. West Texas Intermediate (WTI) crude futures were down $2.48, or 2.3%, at $103.71.

US Federal Reserve chief Jerome Powell said the central bank’s focus on fighting inflation was “unconditional” and the labor market was unsustainable, comments that stoked fears of further hikes rate.

Investors have tried to assess whether inflation-fighting central banks could push the global economy into recession by raising interest rates.

“Recession fears have their grip on the markets, but the change in mood is more one of declining optimism than rising pessimism,” said Julius Baer analyst Norbert Rucker.

Investors were also concerned that high gasoline prices had bottomed out and demand destruction would soon set in, said Robert Yawger, director of energy futures at Mizuho in New York. .

“It definitely made its way into the conversation,” said Yawger, who added that he thinks gasoline still has room to rise.

U.S. retail prices are currently averaging $4.94 a gallon, down about 10 cents from the peak, according to AAA.

Even outside the highs, fuel prices remained feverishly high and led US officials and oil executives to meet in an attempt to agree on a plan to ease the pain at the pumps. Major U.S. oil refiners and Energy Secretary Jennifer Granholm walked out of an emergency meeting on the issue without concrete solutions, according to a source familiar with the talks, but the two sides agreed to keep talking.

The most recent estimates from the American Petroleum Institute, according to market sources, showed U.S. crude and gasoline inventories rose last week, which also weighed on prices, Yawger said.

Official weekly estimates of U.S. oil inventories were due to be released on Thursday, but technical issues will delay those numbers until next week, the U.S. Energy Information Administration said.

Russia continues to find alternative customers for its oil, with China and India among the biggest buyers now that Western countries have sanctioned Moscow for invading Ukraine.

China’s crude oil imports from Russia in May rose 55% from a year earlier and reached record highs.

India is providing safety certification for dozens of ships run by a subsidiary of Russian shipping group Sovcomflot, allowing oil exports to India and elsewhere after Western certifiers withdrew their services.

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Russia overtakes Saudi Arabia as China’s top oil supplier in May after 19-month gap http://louthonline.com/russia-overtakes-saudi-arabia-as-chinas-top-oil-supplier-in-may-after-19-month-gap/ Mon, 20 Jun 2022 05:12:24 +0000 http://louthonline.com/russia-overtakes-saudi-arabia-as-chinas-top-oil-supplier-in-may-after-19-month-gap/

Saudi Dallah Health expands its presence and doubles its occupancy rate since 2012

RIYADH: Saudi Dallah Health Co. has seen the number of patients rise from around 715,000 in 2012 to over 1.7 million by 2021, boosting the healthcare scenario in the region.

Speaking to Arab News, Tarek Othman Alkasabi, chairman of the board of Dallah Health, said the increase in health services could be attributed to its expansion from one hospital to five. The company has also added 13 beauty clinics and launched a major pharmaceutical distribution company, Dallah Pharma, since listing on the Tadawul stock exchange in 2012.

Over the same period, revenue has grown exponentially, from around SR637 million ($169.7 million) in 2012 to SR2.11 billion in 2021, according to Alkasabi.

Dallah Health currently offers medical services in major Saudi cities such as Riyadh, Makkah and Jeddah.

Tarek Othman Alkasabi

Health Wealth

As part of its expansion plans, the executive noted that Dallah was seeking to establish its operations in Riyadh to meet the growing demand for health services, drug distribution and production.

“We are also focused on expanding into the most populated areas of the Kingdom, such as the eastern and western regions,” Alkasabi said.

“With regard to international expansion, our efforts are focused on Dallah Pharma, a direct subsidiary of Dallah Health, which holds a license to produce 40 pharmaceutical and cosmetic products to be marketed throughout the Kingdom and seeks to expand in the markets international,” he added.

In terms of investments and acquisitions, Dallah had recently acquired an 8.2% stake in International Medical Co. as part of a strategy to strengthen its presence in Jeddah.

Alkasabi said the company is looking to eventually acquire 27.2% of International Medical, adding that it is “constantly evaluating opportunities that will allow us to bring our quality healthcare to the wider Saudi community.”

When asked if the company intended to borrow, he replied: “The option to exploit the debt market is always open, and we have a long-standing relationship on which we could take advantage if we wanted to.”

The path to follow

Dallah management recently launched a five-year strategy to achieve strategic goals by 2026, including improving the patient experience at Dallah facilities by redesigning patient-centric journeys, using data to identify necessary changes and digitizing operations across our network of organizations.

Under Dallah Health’s new five-year strategy, the company will invest in digitizing patient experiences and operations across all hospitals and facilities by implementing state-of-the-art core solutions and comprehensive digital infrastructure.

As part of the Ministry of Health’s eHealth strategy, Dallah is working to improve patient convenience by using telemedicine and online appointments to improve eHealth adoption.

“Currently, we are seeing growing private sector involvement in healthcare across the Kingdom,” Alkasabi said.

He expects the trend to continue as the Kingdom moves forward in its transformation of the health sector under the Vision 2030 plan.

Dallah Health recorded strong financial results in 2021, posting a 104% increase in profit to SR275 million, while revenue increased by 60% to SR2.11 billion at the end of 2021. 2021.

In the second quarter of this year, Dallah reported a 59% increase in profit to SR 82.8 million, mainly due to higher revenue from continued increase in patients and improvement efficiency.

Shares of the Saudi-listed company have soared 54% year-to-date to close at SR116 on June 15.

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stock market: ETMarkets Smart Talk: High inflation could put pressure on stock markets in the short to medium term: Prakarsh Gagdani http://louthonline.com/stock-market-etmarkets-smart-talk-high-inflation-could-put-pressure-on-stock-markets-in-the-short-to-medium-term-prakarsh-gagdani/ Mon, 20 Jun 2022 03:31:00 +0000 http://louthonline.com/stock-market-etmarkets-smart-talk-high-inflation-could-put-pressure-on-stock-markets-in-the-short-to-medium-term-prakarsh-gagdani/ “We expect equity markets to trade with a negative bias in the near to medium term until we see signs of inflation slowing,” says Prakarsh GagdaniCEO, 5paisa.com.


In an interview with ETMarkets, Gagdani said, “A strong dollar is good for IT, pharmaceutical and export-oriented stocks that earn a higher percentage of their dollar earnings. Every dollar earned from exports translates into more rupees added to their bottom line. » Edited excerpts:


As central banks consider tightening the money supply, what is your view of the markets in the medium to long term?
Central banks in most parts of the world are raising interest rates and tightening the money supply to control rising inflation. Tighter monetary policy typically results in lower stock prices given the higher discount rate of expected cash flows and lower future economic activity.

Thus, we expect equity markets to trade with a negative bias in the short to medium term until we see signs of slowing inflation.

However, long-term investors should look to accumulate quality stocks at lower levels, as valuation has become reasonable in some pockets.

Encouraging data from MF in May and SIP flows are increasing slightly, which is a positive sign, but at the same time redemptions are also happening. But do you expect more funds to be allocated to fixed income securities relative to equities?
Retail inflows have increased significantly after the pandemic and a decent amount of inflows are going through SIP mode which is invested with a long term perspective.

Back to recommendation stories



The observed buybacks should be a temporary phase as the markets correct sharply. So, we might see a temporary transition to fixed income funds, but once the global market stabilizes, we would again see a large allocation to equity funds, as they have historically proven to offer high returns to investors. .

If anyone is planning to put Rs 10 lakh now – that is the perfect way. What is the ideal asset allocation strategy?
Historically, equities have generated a higher rate of return among different asset classes over a longer period. However, one should be aware that equity investments come with greater volatility in the investment portfolio.

Valuations after the recent correction have become reasonable, but near-term risks remain elevated due to the weak global scenario.

Thus, if one is looking to start from scratch, one can allocate 60% to equities at current levels and 40% to bonds. However, if the market corrects further, a gradual increase in the equity allocation should take place at lower levels, which would be beneficial in the long term.

Thus, it should not be a one-time activity, but investors should review the markets from time to time and make necessary changes accordingly.

Do you think FDs will now become more popular, at least for the risk averse investor, in light of the rising interest rate scenario?
Investors generally look for low-risk avenues when stock markets correct. But the FD yields given by banks barely beat inflation. And after-tax returns can often even fall below the rate of inflation.

We think there could be some shift towards fixed returns as the equity market corrects, but once the market stabilizes, investors will once again prefer to invest in equities over FDs to generate higher yields.

We saw the rupiah hit a record high in June – which stocks or sectors are likely to benefit the most from the upside?
A strong dollar is good for IT, pharmaceutical, and export-focused stocks that earn a higher percentage of their dollar earnings. Every dollar earned from exports adds more rupees to their bottom line.

Crude oil is also hovering around $120/barrel – which might not put India in a comfortable scenario if it holds around that level. What will be its impact on the economy, as well as on valuations?
Our country is largely dependent on imports to meet its energy needs. It is therefore clear that import bills will explode and this will have an impact on the country’s current account balance.

It will also lead to higher inflation and therefore hurt economic growth. So our markets will be looking for crude price cues and until we see a cooling in the same, we will continue to see a negative impact on equity markets.

With rising interest rates, do you think that would lower valuations?
Rising interest rates will increase the cost of borrowing for businesses. This in turn has an impact on their income and higher interest rates lead to a devaluation of the income multiple.

Yes, if inflation remains high and RBI tackles it with a sharp hike in interest rates, it would impact equity valuations.

The sale of FII in India is part of the biggest sale in the world. When will FIIs turn the tide and does that mean heavyweight FII stocks where they have a double-digit stake could remain under pressure?
FII has withdrawn a significant amount from our markets over the past few months. However, the DIIs absorbed most of their sales and as a result we did relatively well despite their sale.

In the short term, FII heavy stocks could remain under pressure because of this, but given the attractive valuations in some pockets, the downside could be limited for them, as domestic investors seize this as a good opportunity.

Many stocks are trading at double-digit discounts from their 52-week highs. What is the right strategy to follow when buying a falling knife?
One should not seek to invest in stocks just because they have fallen significantly from their 52-week highs. Investors should look for companies with high growth potential whose valuations have become reasonable.

But, you have to be patient and look for a top-down approach. Once there are signs of slowing inflation and stable stock markets, then look to invest in such opportunities.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times)

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Double whammy of consumption-driven growth http://louthonline.com/double-whammy-of-consumption-driven-growth/ Mon, 20 Jun 2022 03:08:25 +0000 http://louthonline.com/double-whammy-of-consumption-driven-growth/

ISLAMABAD:

Despite healthy growth of 5.97% in FY22, Pakistan’s economy remains in turmoil and in need of an IMF bailout.

In fact, the healthy growth rate is widely regarded as one of the main reasons behind the bleak economic scenario. For the coming year, a lower growth target of 5% was announced in the budget.

Why instead of inspiring confidence in the economy, the growth rate of nearly 6% generated pessimism?

The answer to this question lies in analyzing the composition of gross domestic product (GDP) in the outgoing fiscal year.

GDP is categorized into three components: consumption, investment and net exports (difference between exports and imports of goods and services) and takes stock of the share of each component in total expenditure.

This approach is important because the medium to long-term growth of the economy depends not only on the amount of revenue generated, but also on how the revenue generated is spent.

Consumption represents the satisfaction of present needs. Universally, consumption is the largest component of GDP and includes household and government consumption expenditure.

Investment is the satisfaction of future needs by increasing the productive capacity of the economy. It includes both public and private sector investment expenditure.

Disposable income (income minus direct taxes) generated in an economy can be spent or set aside as savings for investment. There is therefore a trade-off between consumption and savings or investment expenditure. The more an economy consumes, the less income it has left to invest.

Exports represent the difference between domestic production and domestic consumption. The higher the domestic consumption, the lower the volume of goods and services available for export.

Imports are the difference between domestic demand and domestic production (minus exports). Higher domestic demand relative to domestic production results in higher import volume.

From the theoretical framework, let’s move on to the real numbers. According to the Pakistan Economic Survey, in FY22, consumer spending accounted for 96.2% of GDP, while the share of investment remained at 15.1%.

Household consumption accounted for 85.2% of total expenditure. By origin, investment expenditure of 15.1% was anchored to 11.1% national savings, including 4.5% domestic savings and 4.1% foreign savings.

The combined share of consumption and investment in GDP totals 111.3%, which is not possible because it cannot exceed 100%. The only way to make this possible is for the third component of expenditure, namely net exports, to be a negative figure, which remained at -11.4% in FY22 (exports 10.5%, imports 21.9%).

This explains why despite robust growth, the economy is in a precarious state and needs immediate inflows of capital from abroad, forcing the government to take very strict and obviously unpopular measures at the behest of the IMF.

The composition of GDP in FY22 is therefore a double whammy. First, consumption had a disproportionately high share compared to investment. At 15.1%, Pakistan’s investment-to-GDP ratio remains one of the lowest in the world, making it extremely difficult to record sustained growth.

Second, even the low level of investment was financed by a much lower level of domestic savings (4.5% of GDP).

This is not surprising since the disproportionately high share of consumption in total expenditure left little room for domestic savings.

Since total savings in an economy must equal total investment, the only way for a country to have greater investment than domestic savings is to tap into savings from abroad through debt and non-debt generating instruments.

Savings from abroad can take two forms: (a) savings of Pakistani nationals living abroad and (b) foreign savings.

In FY22, the gap between national saving and national saving, as a percentage of GDP, was 6.6 percentage points, mainly explained by the $22.9 billion remittances received from Pakistani expatriates.

The difference of four percentage points, as a percentage of GDP, between national savings and investment was explained by foreign savings.

Among foreign savings or capital inflows, foreign investment, representing a non-debt creating instrument, in the first nine months of FY22 was $1.45 billion, or 0, 38% of GDP.

During this period, the country borrowed $12.78 billion (3.34% of GDP of $383 billion) in foreign debt, which was the lion’s share of total foreign savings.

Unsurprisingly, the accumulated external debt reached $88.8 billion at the end of March 2022.

Debt service is a drag on both future consumption and investment. In FY22 (Jan-March), external debt repayments and interest payments were recorded at $8.14 billion and $1.30 billion respectively, together constituting 2.46% of GDP.

Rising consumption widened the gap between domestic demand and domestic production, which was filled by rising imports.

As export growth of 38.7% failed to keep pace with import growth of 45.7%, the trade deficit exploded, increasing the country’s external debt.

In short, consumption-based growth financed largely by foreign savings has placed the economy on a dangerous and unsustainable path.

Using an analogy, suppose that due to a sudden increase in demand, an automobile manufacturing company produces 20,000 units per year, which is even more than its maximum production capacity of, say, 19,000 units.

At first glance, this is a brilliant performance, as it has strengthened the company’s turnover. However, a detailed analysis reveals that the feast was accomplished by having staff work overtime, using the machines full throttle, outsourcing the production of 1,000 units, purchasing parts and components at higher prices. high and borrowing at a higher interest rate.

As a result, at least 50% of worn machinery must be replaced, exhausted workers must be compensated for overtime, contractors and suppliers must be paid, and debts must be honoured.

The cumulative cost of meeting these expenses is so high that the company will have to lay off at least 20% of the workforce, can only replace 25% of the worn out machinery and cannot buy more than 70% of the parts. and components needed to meet the new production target.

As a result, the following year, production will have to be reduced to a maximum of 12,000 units. Higher production did the company more harm than good.

The writer is a columnist based in Islamabad

Published in L’Express Tribune, June 20e2022.

As Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join the conversation.

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AP Business SummaryBrief at 12:09 p.m. EDT | Company http://louthonline.com/ap-business-summarybrief-at-1209-p-m-edt-company/ Fri, 17 Jun 2022 16:09:26 +0000 http://louthonline.com/ap-business-summarybrief-at-1209-p-m-edt-company/

T-shirts ? Ice cream? Retailers cash in on Juneteenth

NEW YORK (AP) — Retailers and marketers were quick to commemorate June 19 with an avalanche of merchandise ranging from ice cream to t-shirts to gifts. But many are receiving backlash on social media for what critics say is undermining the day. June 19 was designated as a federal holiday last year to honor the emancipation of enslaved African Americans. A search for Juneteenth items among online sellers like Amazon and JC Penney yielded everything from toothpicks with Pan-African flags to party plates and balloons. Walmart, the nation’s largest retailer, apologized last month after being criticized on social media for a Juneteenth flavor of swirled red velvet and cheesecake ice cream under its Great Value store label.

Russia again reduces natural gas exports to European countries

PRAGUE (AP) — Russia has again cut natural gas to Europe as countries struggled to reduce their dependence on Russian supplies amid the war in Ukraine. Friday marks the third day of deep cuts in the fuel that powers industry and generates electricity in Europe, which also hit Germany and Austria. It has further driven up already high energy prices which are driving record inflation in the European Union. The Russian side told the Slovak state-controlled gas company that it would cut the flow of gas to the country by 50%. Russian energy giant Gazprom also told Italian gas company Eni that it would only supply 50% of the gas requested for Friday. France no longer receives natural gas from Russia.

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Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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What’s in store for New Zealand’s economy in 2022 and beyond? http://louthonline.com/whats-in-store-for-new-zealands-economy-in-2022-and-beyond/ Fri, 17 Jun 2022 05:47:00 +0000 http://louthonline.com/whats-in-store-for-new-zealands-economy-in-2022-and-beyond/

Summary

  • New Zealand’s economy contracted by 0.2% in the March quarter of 2022.
  • Global macro factors have clouded New Zealand’s growth outlook, with inflation and interest rate hikes making the situation more challenging.
  • Experts believe that strong exports could give a boost to the country’s economic growth.

While the New Zealand (NZ) economy has recovered quickly from pandemic-related disruptions, global macroeconomic factors are now shaping a slower growth outlook for the country. Meanwhile, rising interest rates are weighing on households nationwide. Economists are now worried about a possible drop in consumer demand, which could threaten the country’s economic recovery.

In a recent report, the New Zealand Institute of Economic Research (NZIER) announced a downward revision to New Zealand’s growth outlook for the coming years. The report says heightened pessimism among households and businesses could translate into reduced spending and business investment. Meanwhile, the report highlighted growing headwinds for the economy, including global supply chain disruptions, war in Ukraine and rising interest rates.

Against these headwinds, New Zealand exports are expected to keep the economy afloat. NZIER expects solid export growth amid continued international demand for New Zealand exports. Overall, conditions are expected to remain challenging for the country as inflation could rise further in the coming months. In response to inflation, the Reserve Bank of New Zealand (RBNZ) could continue its series of policy tightenings. Thus, future policy measures should be geared towards boosting domestic demand.

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Unoptimistic data on New Zealand’s GDP

Gross domestic product (GDP) figures recently released by Stats NZ reveal that New Zealand’s economy contracted by 0.2% in the March quarter of 2022 compared to the December quarter of 2021. The drop in GDP came after a 3% expansion in the previous quarter. The economic downturn has come as a major shock to government officials and the public.

The Reserve Bank had widely expected GDP to grow by 0.7% in the first three months of 2022. Meanwhile, GDP forecasts from ANZ, BNZ and Westpac were for zero percent growth for the quarter. Some experts believe the latest GDP result has boosted the possibility of a recession in the coming months.

However, it is important to note that the Omicron epidemic influenced the data for the March quarter of 2022. There was a slight decline in economic activity during the period due to the shortage of personnel and the increase in Omicron cases in the country. But the challenges developed over the following months seem more concerning because they could take even longer to solve.

Global factors weighing on the economy

The March quarter was marked by fears surrounding rising interest rates and the start of the Russian-Ukrainian war. As New Zealand’s economy emerged from the pandemic, reports of the Russian-Ukrainian war again created uncertainty.

At the same time, interest rate hikes have become the focal point of the economy, leading to lower consumer confidence. Central banks around the world have adopted high interest rates to combat inflationary pressures.

GDP data for the March 2022 quarter further revealed a decline in production in the food, beverage and tobacco manufacturing subsector. Additionally, industries such as agriculture, forestry and fishing have seen a decline in production. Many experts believe that the losses of the previous quarters could be offset by significant increases in the months to come.

Reopening borders to the rescue

Speculation is rife that the months following the June quarter could see an upturn in economic activity. The reopening of international borders should be an essential source of strength in these current times of distress.

In particular, international tourism plays an important role in New Zealand’s economic growth. During the pandemic, the absence of foreign tourists has taken a deep toll on the economy despite many other headwinds. The tourism, hospitality and entertainment sectors have suffered a disproportionate impact from the pandemic. With the reopening of borders, New Zealand could see a rebound in these sectors. However, the latest GDP data has clouded the economic outlook, prompting experts to revise their expectations for the coming years.

All in all, the next few months promise to be full of uncertainties. Supply chain disruptions and global inflationary pressures have made post-pandemic recovery even more challenging. However, the New Zealand labor market remains tight, with strong exports expected to keep the economy afloat. However, the actual circumstances should become clearer over time.

GOOD READ: Will the fall in GDP have an impact on the monetary position of the RBNZ in the next MPC?

© Scoop Media

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USD/TRY Ignore USD Pullback Towards 17.30 As Turkish Credit Default Swaps Hit All-Time High http://louthonline.com/usd-try-ignore-usd-pullback-towards-17-30-as-turkish-credit-default-swaps-hit-all-time-high/ Tue, 14 Jun 2022 05:06:44 +0000 http://louthonline.com/usd-try-ignore-usd-pullback-towards-17-30-as-turkish-credit-default-swaps-hit-all-time-high/
  • USD/TRY remains firmer for the third day in a row despite the DXY retreating from the 20-year high.
  • Türkiye 5-year credit default swaps return to a record high of 895 basis points.
  • Turkish industrial production has recovered but inflation woes, Fed-led chatter favors pair buyers.
  • US PPI, risk catalysts can offer immediate directions.

USD/TRY is hesitant to portray US Dollar weakness as it nears 5:30 p.m. ahead of Tuesday’s European session. In doing so, the Turkish Lira (TRY) pair vindicates TRY traders’ fears as the country’s Credit Default Swaps (CDS) hit an all-time high.

That said, Reuters reported 29 basis points (bps) of a jump in Turkish 5-year credit default swaps to a new high of 854 bps by the end of Monday, citing S&P Global. Credit default fears in Turkey ignore the fall in industrial production in April, to 10.8% against 7.95% expected and 9.8% previously.

The reason for the pessimism surrounding TRY may have to do with inflation nearing 70% and President Tayyip Erdogan’s rejection of rate hikes.

It should be noted that the liraalisation seems to offer intermediate breaks to the uptrend of USD/TRY. Recently, the Central Bank of the Republic of Turkey (CBRT) announced that companies using Turkish lira rediscount credits will be offered longer maturities and will be required to commit to selling at least 30% of their export earnings. to banks, according to Reuters.

Elsewhere, a jump in Fed rate hike expectations of 75 basis points joins China fears to keep USD/TRY buyers hopeful.

While Wednesday’s Federal Open Market Committee (FOMC) is the main catalyst for USD/TRY traders, the US Producer Price Index (PPI) for April, expected at 10.9% YoY vs. 11, 0% before, might entertain intraday traders.

Technical analysis

Short of breaking the resistance line turned January support near 16.50, quickly followed by 20-DMA support near 16.40, USD/TRY bears remain off the table.

Meanwhile, the upper line of the 5-week-old bullish channel around 17.45 is challenging USD/TRY upside ahead of the yearly high around 17.50.

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