• NOVEMBER 19, 2008

Interest in India intact and more

Interest in India still intact
If the turnout in the recent equity conferences on India is any indication, then India does not seem to have fallen way off the radar of foreign investors. Quite a few international financial majors that have their stock broking arms in India have held their India centric conferences both in India as well as abroad and the response, as per a leading business daily, has been quite impressive. Corporates, hedge funds and long-only investors emerged as the major participants in these events. Although conscious of the fact that valuations in the country have turned quite attractive, these investors wanted to wait for macro stability to emerge before they could start investing in India again. Comforting thoughts indeed in these volatile times.

UK's inflation falls sharpest in 11 years
Inflation, the bugbear of policymakers across the globe not until long back, now seems to be a thing of the past. Thanks to retreating prices of commodities and slumping demand, a lot of nations have started reporting sharp pullback in inflation rates. UK is the latest country to join the fast mushrooming club. One of the world's and the Eurozone's largest economies has recorded the steepest drop in inflation in more than 11 years, thus giving its central bank, the Bank of England further headroom to cut interest rates. Data released by the country's national statistics office has revealed a monthly drop in the CPI to 4.5% from a high of 5.2%, pointing to the fact that the Brits have indeed curbed some their splurging ways. While this could have been very good news in normal times, it is likely to make policymakers jittery in the current recessionary environment, as falling consumption is not likely to do any good to the nation's economic growth. Important to add that the Bank of England had earlier reduced interest rates by a record 1.5% to help contain the decline in GDP. If conditions do not improve, UK could well be staring at both price as well as demand induced deflation.

Another US automaker raises cash in stake sale
That US automakers are desperately in need of some financing was proven once again yesterday. Close on the heels of the country's largest automaker GM selling its stake in Suzuki, there has come another stake sale. This time around by Ford, the country's second largest automaker. As per reports, the company has sold its 20% stake in Japanese automaker Mazda for a total consideration of US$ 540 m to help it tide over the acute cash crunch that it is facing currently. The sale marks a huge reversal in the fortunes of Ford as it had emerged the saviour for Mazda, when the latter had run into problems of debt and excess capacity, exactly the same problems that Ford is facing now, way back in 1996. Important to add that India's Tata Motors had bought the ownership of Jaguar and Land Rover from Ford earlier this year for a total of US$ 2.3 bn. As far as financial aid from the US government is considered, odds continue to be stacked against the auto majors with the Big 3 coming in for sharp criticism for their short sightedness and lack of business vision at a Congressional hearing yesterday.

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 (Research Analyst) bearing Registration No. INH000000537 (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, Canada or the European Union countries, 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 (Research Analyst)
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