BARCLAYS WEALTH ADVISES INVESTORS TO STAY DIVERSIFIED

The dangers that overshadowed capital markets in 2011 have not suddenly disappeared, but the positive developments that were visible at the end of the year have continued.

The European Central Bank’s decisive actions are visibly muting the risk of another banking crisis. Reports of the demise of the US consumer have again proven somewhat premature. Forward-looking data even in the UK and euro area have been less fragile than feared.

As a result, the New Year rally in risk assets has some foundation, as noted by Kevin Gardiner in the February edition of Compass. 

Kevin comments: “Of course, markets rarely move in a straight line for long. We still do not know exactly how large the losses on Greek government debt will be, and who will bear them. US politicians retain the ability to snatch economic defeat from the jaws of victory. Geopolitical tensions in and around the Middle East remain high. However, a significantly worse outcome than our ‘muddle through’ scenario was, we think, priced into markets in 2011.

“Our advice to investors thus continues to be that they should stay diversified, and indeed hold more risk assets than usual, such as developed equities and high yield bonds, and fewer government bonds.  This is not because we expect many governments to fail to honour their commitments, but simply because those bonds look expensive.”

February’s Compass also looks at how the price paid for an investment can make it difficult psychologically to make sound decisions about selling it; and provides an update on three “alternative” asset classes – alternative trading strategies (ATS), (US) real estate and commodity futures – that Barclays Wealth believes should be part of a balanced long-term portfolio. 

Financing Infrastructure in India: Macroeconomic Lessons and Emerging Market Case Studies IMF work Paper

Driving infrastructure development, notably mobilizing financial resources for infrastructure projects, has been challenging in many countries. This study includes two parts: an empirical analysis of macroeconomic risks associated with infrastructure booms, and a case study of four emerging economies about their practice of funding infrastructure development. The study shows that (i) there is no empirical evidence that rapid infrastructure growth would undermine contemporary macroeconomic performance, implying that room is created to accommodate infrastructure booms without compromising fiscal and external sustainability; (ii) banks may play an important role in financing infrastructure, but caution is needed to avoid directed lending and regulatory forbearance that the authorities may use to promote financing; (iii) capital market development is important to accommodate the usually high financing needs, and encouraging private investors to move into infrastructure would require regulatory and institutional improvements; and (iv) public support, including credit guarantees, may help bolster investors’ confidence, but the authorities should carefully monitor and manage fiscal risks.

International Markets weekly highlights

Weekly News Highlights,

·        Germany’s ZEW index of economic sentiment slipped more than expected in July as Europe’s government debt crisis weighed on optimism despite the continuing strength of Europe’s largest economy.

·         The Bank of England’s last meeting signaled policy makers are less pessimistic about the economy than some investors had anticipated, making further bond purchases unlikely. 

·         On a seasonally adjusted basis, the composite Purchasing Managers' Index (PMI) in Germany dropped to a score of 52.2 points in July, the lowest level in 24 months. 

·         The manufacturing PMI in the Euro-zone dropped to a reading of 50.4 points in July, following a reading of 52.0 points posted in June.

·         The rate of new home construction in the United States exceeded analysts' expectations and rose in June by 14.6 percent to an annualized rate of 629,000 units.

 
      ·         Japan's merchandise trade exports (YoY) improved to -1.6 percent in June from -10.6 percent, where the expectations estimate of -4.1 percent
IndiaThe All-India Consumer Price Index Numbers for Agricultural Laborers and Rural Laborers for June, 2011 increased by 6 and 5
points respectively to stand at 598 points for Agricultural Laborers and 597 points for Rural Laborers.

Cochin Stock Exchange (CSE):

Cochin Stock Exchange (CSE) is counted among one of the premier Stock Exchanges in India. It was established in 1978 and had undergone tremendous transformation over the years. In 1978, it had only 5 companies listed and had only 14 members. Currently, it has 508 members and 240 listed ompanies.

 Cochin Stock Exchange went for computerization of its offices in 1989. To keep pace with the market, it took various initiatives, one such initiative was trading dematerialised shares. It introduced the facility of computerised trading known as "Cochin Online Trading" (COLT) on March 17, 1997. It also became one of the promoters of the Interconnected Stock Exchange of India (ISE). The basic idea of ISE was to consolidate the smaller and fragmented markets which are less liquid into a national level integrated liquid market.

Goals of Cochin Stock Exchange

•  To provide investors a high level liquidity where the cost and time in the entry and exit from the market becomes the least.
•  To provide a high tech solutions and absolute transparency of all the operations, to the extent of possibilities.
•  To built an infrastructure for the capital market by turning it into a financial super market.
•  To spread equity cult and serve the investors of the region.
•  To provide professional stock broking and investment management function.
•  To impart capital market knowledge to all its intermediaries on a continuous basis.
•  To develop a winning team of professionals, be it as employees of the exchange to play a crucial role in shaping the future of the exchange and its associates

Cochin Stock Exchange Membership Profile

 At present Cochin stock Exchange is having 508 members. Each share of the members carries a value of Rs 1250. The paid up capital is Rs. 580,850 and the authorised capital is Rs. 10,00,000 with the total membership limited to 1000.

 According to the norms of SEBI, Cochin Stock Exchange charges an initial deposit of Rs. 2 lakhs from its members. Each member has to contribute additional deposits based on the volume of trade. Along with this there is a monthly subscription fee of Rs. 200 and Rs. 500 for individual and corporate members respectively. The members can appoint assistants or sub-brokers based on the guidelines provided by SEBI.

 Each member has to pay an annual amount of Rs. 5000 during the five years of membership to SEBI as advance payment on or before 1st October of each financial year. From the 6th to 10th year of membership, the total amount payable is Rs. 5000 being payable at the beginning of the 6th year, which is counted as payment of Rs. 1000 per annum. More to this, if the previous year's turnover is more than 1 crore, a 0.01% of the exceeding amount should be paid to SEBI.

Cochin Stock Exchange Investor Protection Cell CSE maintains a separate legal department which is headed by Manager-Legal. It advises the management about the merits and demerits of legal issues including the exchange. The department's major function is to bring to notice to members and the investing public about the different rules, regulations and directives of SEBI with regard to trading in the capital market by the brokers and sub-brokers.

 The areas which are being looked after are:
 Investor Grievance Service
 Arbitration
 Default
 Cochin Stock Exchange Training Centre
 The Institute educate members, investors and general public. It offers four essential modules. They are as follows: Capital Market
 Derivatives
 Depository
 Mutual Funds
 Cochin Stock Exchange Facilities A software called MULTEX is given to all brokers. The brokers can simultaneously access to BSE and NSE terminals. To analyse the market trends, the exchange has provided a software package known as Meta Stock and ERS. It has gained wide acceptance from members, investors and students from various institutes.

The exchange maintains a good library with over 2500 books, journals, business magazines and reports. Beside all these, it also maintains various committees for the betterment of the brokers, public and other associated with the exchange. An optical fiber connection has been laid down by Asianet Satellite Telecommunications to facilitate more trading options.

Cochin Stock Exchange Office
 Cochin Stock Exchange Ltd.
 36/1565,4th floor
 Judges Avenue,Kaloor
 Kochi-682017
 India
 Website: www.cochinstockexchange.com

Inflationary conditions out of my control: PM

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NEW DELHI: Prime Minister Manmohan Singh Wednesday told editors that international economic and political conditions that were "out of his control" had led to high inflation in the country. He added that inflation should drop to six percent by March 2012.

"We asked him that as an economist, you are expected to perform well on the economic front - but in your tenure, inflation has gone up so high. He (prime minister) said that I agree and take the criticism," Kumar Ketkar, editor of Divya Marathi told reporters after the interaction at the prime minister's 7, Race Course Road residence.

The prime minister told the editors that there "are three factors which are out of his control - the international commodity prices, the Middle East crisis, the oil prices".

Manmohan Singh told the group that the government was trying to bring back inflation under control. "He said by March the inflation would be around six percent," Ketkar said.

India's food inflation had soared to a nearly 10-week high of 9.13 percent for the week ended June 11. The government also increased the price of diesel, cooking gas and kerosene last week