Dec 28, 2007|
Not a way to end the year!
A leading business paper shouts out - "Demoncracy! Benazir killed" - reporting the assassination of the former Pakistani Prime Minister Mrs. Benazir Bhutto yesterday evening. Terrorism has reared its ugly face again - spelling troubled times for the restoration of democracy in Pakistan. And global financial markets have taken note of the same. The US markets led the fall yesterday after the news of the killing made its way as breaking news across newswires.
The Asian markets have taken the cues and are trading in the red with the Hong Kong and Japan leading the fall. While the Indian markets are yet to open for trading today, a knee jerk reaction could be expected, as uncertainty in Pakistan politics would mean uncertainty in our relations with them. The stock markets are not the only to take note of the unfortunate event. As would have happened with any such event that stokes uncertainty and instability, prices of bonds, gold and oil also shot up yesterday. The main worry stems not only from the fact that Bhutto's assassination would lead to a setback to the democratic process in Pakistan, concerns are also doe to the fact that the country possesses nuclear capabilities, which have a risk of going in evil hands. As if the natural disasters in 2007 were not enough (these cost US$ 30 bn in 2007 as reported by leading global insurers), the world might continue to pay a heavy price for terrorism.
In the meanwhile, investors shall continue to pay the price for financial 'terrorism' (terrorism is after all a destruction - this time of wealth) propagated by the likes of Citigroup, Merrill Lynch and JP Morgan. Reports indicate that these banks may write down an additional US$ 34 bn in securities linked to the collapse of the US subprime mortgage market. These losses have already totaled almost US$ 100 bn in 2007. But does anyone seem worried? Doesn't seem so! And why will anyone be worried when the central banks like the US Fed and ECB are ready to lend a helping hand (carrying low cost cash) to the defaulters?
While experts may believe that the Pakistan event might not have an impact on global (and Indian) markets for long, events like this (and the subprime led credit crisis) indicate that the world faces an overload of risks and uncertainties. We talk about the risks of global warming, but we cannot survive without the electricity that carbon dioxide producing coal generates. We talk about a nuclear arm free world, but work towards building a better missile than our neighbour. We crib about rising inflation, and then blame the banks when interest rates are rising. We 'seem to be' worried about rising default, but are very happy when central banks put more money in the hands of defaulters. And we seem to be worried when valuations of stocks become expensive, but are happy to speculate more because our friends, relatives and colleagues are doing the same! Where will it all end? We have no clue...seriously! What we can do is wait for a happy new year 2008! After all, there's more to life than just stocks and valuations!
More Views on News
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.
Aug 23, 2017
Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?
Aug 23, 2017
Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.
Aug 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
Aug 22, 2017
Post demonetisation, a cut in bank savings deposits rates was in the offing.
More Views on News
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.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
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: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407