Amidst all the gloomy news coming out from the US economy, the one silver lining has been the uptick that its exports have been demonstrating for the past few weeks. This is mainly attributable to the plunge in the dollar against most world currencies, rendering exports more competitive. Given the recency of this phenomenon, its hard to predict if this is a trend or a mere blip. But, given the fact that the Fed has been working the currency printing presses overtime, the dollar’s value is certainly not heading back north any time soon. On the other hand, rising commodity prices, coupled with the reduction in purchasing power of the dollar is also causing inflation to rise to uncomfortable levels. And with GDP growth also dramatically slowing down, we have the makings of a classic “stagflation”, believed to be a nightmare for central banks for the following reason. Read the rest of this entry »
Stagflation may actually benefit the US
Posted by Arun Uday on April 2, 2008
Posted in Uncategorized | Tagged: economy, stagflation | 2 Comments »
The myth of “recession proof”
Posted by Arun Uday on March 11, 2008
It goes without saying that recessions by definition are difficult times for businesses in general. Yet, we often hear how some businesses/economies/countries are more protected from recession than others. But, on closer examination, it becomes evident that such defences from downturns are either mythical or marginal at best. The three instances of this from the recent past that readily come to my mind are: the Indian economy, Indian IT companies and Google. Many observers had till quite recently euphorically declared that all of these will not be adversely impacted by any of the weaknesses in the global economy. The reasons offered may have been different in each case, but the conclusion was the same. However, in each of these, it seems that such enthusiasm was a little premature. Lets take each of these separately.
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Posted in Uncategorized | Tagged: economy, Recession | 2 Comments »
Top 20 banks in the world
Posted by Arun Uday on February 28, 2008
One of the purported strengths of India over China is supposedly our well developed financial and banking infrastructure. Therefore, it came as a surprise to me to learn that 3 of the top 5 banks (by mkt cap) in the world today are from China and the Indian banks are nowhere in the picture. HSBC, btw is the third largest.
See:
http://news.hereisthecity.com/news/business_news/7538.cntns
1. Industrial & Commercial Bank of China Limited - $277.5bn market capitalization
2. Bank of America - $195.9bn
3. HSBC - $176.7bn
4. China Construction Bank Corp. - $165.2bn
5. Bank of China - $165.0bn
6. JPMorgan Chase - $159.6bn
7. Citi - $140.6bn
8. Wells Fargo - $112.3bn
9. Banco Santander - $109.8bn
10. Mitsubishi UFJ Financial - $105.4bn
11. ABN AMRO - $103.6bn
12. UniCredit - $97.5bn
13. Intesa SanPaolo - $89.8bn
14. BNP Paribas - $88.4bn
15. Goldman Sachs - $87.6bn
16. UBS - $84.8bn
17. BBVA - $78.3bn
18. Sberbank - $77.7bn
19. Royal Bank of Scotland - $76.0bn
20. Wachovia - $75.4bn
Posted in Uncategorized | Tagged: Top 20 banks | No Comments »
The Wockhardt IPO debacle, and what it means
Posted by Arun Uday on February 8, 2008
It’s been one hell of a week for the markets, swinging wildly like a yo-yo and if all that wasn’t enough, in the midst of it, we have the Wockhardt IPO fiasco. I can’t recall any other instance in recent memory when such a renowned company had to withdraw its IPO the way Wockhardt has had to. While the management of the company has blamed it on the prevailing weak market sentiment, it’s clear that there’s more to it and that someone somewhere was being overambitious. It’s just incidental that I have been contemplating and blogging on the interplay between perceptual (or “synthetic” as I referred to it earlier) reality and fundamental reality, and in this case, its quite obvious that there was a huge disconnect between the two.
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Posted in Uncategorized | Tagged: wockhard ipo | 3 Comments »
Sub prime ruminations (Part 2)
Posted by Arun Uday on January 15, 2008
Discovered how hard it is to get back to writing after a long break. Hence, the second part of the post on this topic comes after a while. However, developments in the past week have provided the ideal backdrop for this piece. Tata’s launch of the “world’s cheapest car”, Nano and Citigroup and Merrill Lynch hinting at taking larger subprime writeoffs and selling stakes to Middle Eastern and Chinese investors to bail them out of their crises are in my view, not just one off phenomena, but a pointer to a larger reality that is currently unfolding, which is - the shift in the world’s epicenter of economic activity away from the US. Read the rest of this entry »
Posted in economics, economy, finance, sub prime | No Comments »
HSBC Private Equity invests in Newgen
Posted by Arun Uday on January 8, 2008
Announcing our first investment of 2008 (though it was actually consummated some time back). We have invested USD 7.5 million in Newgen Software Technologies Limited, a New Delhi headquartered software product company. Newgen makes Business Process Management (BPM) and imaging solutions related software and is by far the market leader in the domestic market and other emerging markets such as APAC and MEA. It is especially strong in the BFSI space and having established a beachhead, it is now looking to aggressively expand into other markets and domains. Incidentally, both our investments so far - Trivitron and Newgen play on the theme that I have blogged about earlier about emerging markets being a good testing ground for developing disruptive technolgies. Which means that, nobody can accuse me of not putting my money where my mouth is. 
Posted in HSBC, HSBC Private Equity | Tagged: HSBC Private Equity, Newgen | No Comments »
Sub prime ruminations (Part 1)
Posted by Arun Uday on November 27, 2007
For the past few days, I have been mulling over the fallouts and developments post the sub prime crisis in the US, and there are two strong thoughts that emerge - a)Have the global financial markets become too complex for their own good? and b)Is the US on the verge of losing its position of pre-eminence in the global economy?
As you will see, the two are kind of related, but intend to restrict this post to (a). But, before I delve in, let me take a small philosphical digression and try to connect that with the theme here.
Posted in economics, economy, finance, sub prime | No Comments »
Imminent slowdown?
Posted by Arun Uday on November 22, 2007
I’m in Hong Kong for a few weeks on work and things don’t seem very bright here (I mean on the business front). The Hang Seng Index has had the second largest fall this year and all the pink papers and business channels don’t seem too optimistic either. Nobody’s uttering the “R” word yet, but with oil in kissing distance from $100, the writedowns from subprime crisis showing little signs of ending soon and the dollar on a free fall, all macro economic parameters don’t seem that healthy. Goldman Sachs too has predicted a $2 trillion crunch consequent to the intertia on the part of big banks to lend aggressively following the crises they are going through. As a result, PE buyouts are also witnessing a huge slowdown from a record $400 billion in Q2 CY07 to $130 billion in Q3CY07. It sure looks like a long cold winter ahead.
Posted in economy | 2 Comments »
