X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Credit crisis, salary hikes & more - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Sep 16, 2008

    Credit crisis, salary hikes & more

    Stockmarkets tumble
    It was a day of the fall of the mighty. The extinction of two financial biggies namely Merrill Lynch and Lehman Brothers led to frantic selling by investors in stockmarkets across the world. With the exception of Japan (up 1%), most other key Asian indices lost around 2% to 5% (the BSE-Sensex closing 3% lower). Not surprisingly, the European indices were also at the receiving end declining by around 4% to 5%. The fact that one of the biggest insurers AIG requested the Fed for a funding of a gargantuan US$ 40 bn further added fuel to the fire.

    Oil, in the meanwhile, retreated to the US$ 96 a barrel mark, the lowest in six months, as Hurricane Ike spared the refineries along the Gulf of Mexico coast. While 20% of the US oil refining capacity was shut, there was no major damage reported. The fact that the US economy is slowing down, further exacerbated by the collapse of the investment banks, also played a part in the cooling of oil prices as demand for the fuel reduced. As reported on Bloomberg, crude oil prices have now declined almost 35% from the high of US$ 147 a barrel reached on July 11. However, this did nothing to soothe investor fears as the crippling effects of the subprime crisis took centre-stage.

    Financial crisis deepens
    The scenario for financial institutions keeps getting murkier. A year has now passed since the unraveling of the credit crisis and there seems to be no end to the multitude of write-downs and bailouts. The ones having to weather the storm and literally drowning are investment banks. The last weekend saw a flurry of activity with investment banking heavyweights Merrill Lynch and Lehman Brothers frantically scouring for partners to help them survive and tide the crisis. While Merrill Lynch will be bought out by Bank of America for US$ 50 bn, Lehman Brothers on the contrary has not been so lucky and is headed towards bankruptcy.

    A deadly cocktail of risk taking investment bankers floored by 'fast bucks' and unabashed investments in highly risky and bad mortgage assets have now bought these institutions down on their knees causing them to literally run around with a begging bowl. These developments come at a time when the developed nations in particular are already sinking into a recession. When this crisis will end is anybody's guess.

  • Also read - Once in a century crisis

    Will your salary increase next year?
    There could be light at the end of the dark tunnel. The slowdown in economic growth both globally and in India, it seems, is not expected to hurt salary figures. On the contrary, according to a report prepared by HR Business Solutions, a Hong Kong based firm and published in the Economic Times, salaries in India are expected to increase by 16% in 2009, one of the highest in the Asia-Pacific region, driven by strong economic growth and pressure on employers due to soaring inflation.

    Basing its findings on four economic factors namely GDP growth, inflation, unemployment, demand for manpower and pay hike trends in the past, the report further expects the country's economy to clock a growth of 7% to 8%. More importantly, given that inflation has been raging above 12%, employers are expected to come under pressure to raise salaries. A healthy demand for labour and shortage of manpower having the requisite skill sets is also expected to advance the case for higher salaries.

     

     

    Equitymaster requests your view! Post a comment on "Credit crisis, salary hikes & more". Click here!

      
     

    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    5 Attributes Of Lord Ganesha You Can Apply To Your Personal Finance (Outside View)

    Aug 24, 2017

    With Lord Ganesha's attributes and teachings, awaken your inner-self and inculcate these financial habits for a sound future.

    Why Shopping Online This Festive Season Makes Better Sense (Outside View)

    Aug 24, 2017

    Online shopping if done sensibly can help you save money and carries many other advantages.

    Mr Trump Has Been Broken (Vivek Kaul's Diary)

    Aug 24, 2017

    Kelly, Mattis, McMaster, Cohn, and Mnuchin are in charge. But these Pentagon bureaucrats and Wall Street hustlers may be worse than a loose-cannon president.

    Were You Lured By Mr Market's Bait? (The 5 Minute Wrapup)

    Aug 23, 2017

    Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
  •  

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE SENSEX


    Aug 24, 2017 02:43 PM

    MARKET STATS