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Hazy markets & more

Jul 1, 2008

Haze surrounding stocks
There is a haze surrounding the Bombay Stock Exchange building, as seen from our office window. While this haze is on account of Mumbai's monsoon showers, there is another haze that surrounds stocks listed on the exchange, or for that matter stocks listed in India, and Hong Kong, or China, or the US. Economic growth worries fueled by higher oil prices, rising inflation and subsequently lower consumption spending has severely impacted sentiments across the world. In today's opening trade, for instance, most major Asian markets are trading in the red. The US markets, closed flat yesterday to suffer the worst first half of a calendar year since 1970. The BSE-Sensex closed 341 points lower yesterday to touch its 15 months low. We wonder how long the haze will continue before the dust finally settles?

  • Also read-Roadblock that's hit Asian stocks

    Mantra for sustainable growth
    Slowdown or no slowdown, record spending on infrastructure will continue in emerging economies, reports The Economist, with a special mention of the BRIC economies (Brazil, Russia, India and China). This will help the countries sustain rapid growth. As reported, emerging economies are likely to spend an estimated US$ 1.2 trillion on roads, railways, electricity, telecommunications and other projects in 2008.

  • Also read - Opportunities in infrastructure

    This will be equivalent to 6% of their combined GDPs and twice the average infrastructure-investment ratio in developed economies. With respect to India, the report talks about the government's eleventh five-year plan (2007-2012) of spending nearly US$ 500 bn in infrastructure projects. Whether this is achievable is highly questionable, given the government's deficit and lack of will that has impaired the country's all round development for so many years in the past. As a matter of fact, the World Bank estimates that a 1% increase in a country's infrastructure stock is associated with a 1% increase in the level of GDP. This can be true for India as well, but only if...

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