$438 bn in railway construction- CHINA

China plans to invest $438 bn in railway construction in 5 yrs

China's railway construction has been on a fast track as annual investment surged by 11.3 per cent from 580 billion yuan in 2011 to 800 billion yuan in 2014.

By: PTI | Beijing | November 28, 2015 1:33 PM

China plans to invest a total of at least 2.8 trillion yuan (USD 438 billion) in railway construction during the 13th Five-Year Plan period (2016-2020) making it a stimulus to halt the slowdown of the economy.

National railway network will grow by more than 23,000 kms over the next five years, with intercity projects and ones in Midwest regions being priority, China’s Economic Information Daily reported.

China’s railway construction has been on a fast track as annual investment surged by 11.3 per cent from 580 billion yuan in 2011 to 800 billion yuan in 2014.

During the 12th Five-Year Plan period, China spent a combined 3.47 trillion yuan on newrails, exceeding the original target of 2.8 trillion yuan by far, according to the newspaper.

High-speed railway which covered about 16,000 kms in China still remains as one of the key infrastructure projects, according to the 13th Five-Year plans released by local governments.

President Xi Jinping has directed the officials to keep the GDP to be around 6.5 per cent in the 13th plan as the economy in the Q-3 slipped below the seven per cent for the first time since 2009 causing uncertainty at home and abroad.

China ruled out a major stimulus but has been announcing huge projects to keep up the investment driven growth.

Projects that are expected to be underway include lines from Yinchuan to Lanzhou, Baotou to Xi’an, Chongqing and Guiyang, Datong to Taiyuan and Zhanjiang, and Xiamen to Changshaand Chongqing.

Beijing plans to expand its suburb rail lines by 800 kilometers, and urban transits by 900 kilometers, according to 13th Five-Year Plan proposal, state-run China Daily reported.

The Belt and Road Initiative will also boost exports of high-speed rail technologies and related products, the report said, adding that China expects rail equipment sales to exceed 650 billion yuan by 2020.

http://www.financialexpress.com/article/economy/china-plans-to-invest-438-bn-in-railway-construction-in-5-yrs/171570/

CHINA -YUAN, IMF to include in SDR...!!

What will it mean for the yuan to get IMF reserve-currency nod?

Many major economies, including the US, Germany and UK, say they’re prepared to back the yuan’s inclusion if it meets the IMF criteria

Washington: International Monetary Fund (IMF) representatives have given China strong signals that the yuan is likely to soon join the fund’s basket of reserve currencies, known as Special Drawing Rights, Chinese officials with knowledge of the matter told Bloomberg News this week. Here’s a primer on what that means.

What is a Special Drawing Right?

The fund created the SDR in 1969 to boost global liquidity as the Bretton Woods system of fixed exchange rates unravelled. While the SDR is not technically a currency, it gives IMF member countries who hold it the right to obtain any of the currencies in the basket—currently the dollar, euro, yen and pound—to meet balance-of-payments needs. So the ability to convert SDRs into yuan on demand is crucial. Its value is currently based on weighted rates for the four currencies.

How much of these SDRs are out there?

The equivalent of about $280 billion in SDRs were created and allocated to IMF members as of September, compared with about $11.3 trillion in global reserve assets. The US reported about $50 billion in SDR holdings as of August.

Why does China want this status so badly?

In a 2009 speech, People’s Bank of China Governor Zhou Xiaochuan said the global financial crisis underscored the risks of a global monetary system that relies on national reserve currencies. While not mentioning the yuan by name, Zhou argued that the SDR should take on the role of a “super-sovereign reserve currency,” with its basket expanded to include currencies of all major economies.

Chinese officials have since been more explicit. After meeting President Barack Obama last month at the White House, President Xi Jinping thanked the US for its conditional support for the yuan joining the SDR. Winning the IMF’s endorsement would allow reformers within the Chinese government to argue that the country’s shift toward a more market-based economy is bearing fruit.

Why is the IMF likely to approve this?

Global use of the yuan has surged since the IMF rejected SDR inclusion in the last review in 2010. By one measure, the currency became the fourth most-used in global payments with a 2.79% share in August, surpassing the yen, according to the Society for Worldwide Interbank Financial Telecommunication, known as Swift.

The IMF uses several indicators to determine if a currency is “freely usable,” the benchmark for inclusion in the SDR basket. IMF staff members said in a report in August that the yuan trails its global counterparts in major benchmarks, such as its use in official reserves, debt holdings and currency trading. But staffers have also stressed that the fund’s 24 executive directors, who will make the final call, will need to use their judgment.

Many major economies, including the US, Germany and UK, say they’re prepared to back the yuan’s inclusion if it meets the IMF criteria. Supporting the yuan may boost relations between China and countries such as the UK, which has sought to make London a major yuan trading hub.

Adding the yuan to the basket may also help the IMF improve its standing with the Chinese. China and other emerging markets were supposed to gain greater representation at the fund under reforms agreed to in 2010, but the U.S. Congress has yet to ratify the changes.

What’s likely to happen to yuan assets in the longer term?

At least $1 trillion of global reserves will migrate to Chinese assets if the yuan joins the IMF’s reserve basket, according to Standard Chartered Plc and AXA Investment Managers.

Foreign companies’ issuance of yuan-denominated securities in China, known as panda bonds, could exceed $50 billion in the next five years, according to the World Bank’s International Finance Corp.

“Once the Chinese yuan becomes part of the SDR, central- bank reserve managers and institutional investors will automatically want to accumulate yuan-denominated assets,” Hua Jingdong, vice president and treasurer at IFC, said in an interview in Lima earlier this month during the IMF and World Bank annual meetings. “It will be strategically important for China to welcome all kinds of issuers to become regular issuers in China’s onshore market.” Bloomberg

Bonnie Cao in New York and John Quigley in Lima contributed to this story.

http://www.livemint.com/Politics/t9azL5zeY1yAl4dbgVxNRP/What-will-it-mean-for-the-yuan-to-get-IMF-reservecurrency-n.html

US-MARKETS CRASH --negative news spreading!!

PAUL B. FARRELL 

Opinion: 100% risk of a 50% stock crash if Donald Trump wins nomination

Published: Sept 5, 2015 8:43 a.m. ET

By

PAUL 

B. FARRELL COLUMNIST

“Who will get the Dreary Recovery Going?” taunts Mort Zuckerman in a Wall Street Journal op-ed. The head of U.S. News & World Report warns America that a recession is coming: “They occur about every eight years and America is ill-prepared to weather the one on the horizon.” Ill-equipped.

Yes, the clock is ticking, every 8 years. 2000. 2008. Next 2016, even with a President Trump.

Another great newsman, Bill O’Neill, publisher of Investors Business Daily, author of perennial best-seller “How To Make Money in Stocks,” agrees: Markets have peaked and crashed roughly every four years for the last century, with bigger crashes, long recessions, every eight years. And still most investors will be ill-prepared.

Sounds like a double-teamed confirmation of Jeremy Grantham’s famous BusinessInsider prediction for 2016: “Around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse.”

Get it? A mega crash is coming, dropping half off its peak, down below Dow 5,000. Not just another 1,000-point correction like last month. But a heart-stopping collapse coinciding with the 2016 elections ... then a long systemic recession ... probably lasting till the 2020 presidential election, maybe longer ... no matter who’s in the White House, Doanld Trump, Jeb Bush or Hillary Clinton.

Yes, recessions hit every eight years. The last was just about 8 years ago, warned Zuckerman with these facts: “The period since the Great Recession ended in 2009 has seen the weakest U.S. recovery since World War II,” Our aging bull is actually warning us ... recession dead ahead.

Why no “urgency from the White House,” no push to strengthen the U.S economy, avoid the coming recession? asks Zuckerman. Why? GOP candidates are worse, immature teenagers offering a “handful of Band-Aids.” Any leaders? Trump the egomaniac? God help us.

Next another disturbing Journal op-ed gets tossed into the mix: Dick Cheney is on the attack, sounding like fellow Republican Trump’s motto, “Make America Great Again.” Build a bigger Pentagon war machine, says the architect of the $5 trillion Iraq War fiasco. His latest rally cry: “Restoring American Exceptionalism.” Sorry folks, but the GOP’s relentless efforts to sabotage the White House the last six years (like 50 repetitive and futile House votes to repeal Obamacare) was the exact opposite, an “exceptional” failure of leadership.

The former vice president also quoted conservative columnist Charles Krauthammer: We’re at a “hinge point in history.” And former New York Times war correspondent Chris Hedges one-upped Cheney in Salon.com: The “world is at a crisis point the likes of which we’ve never really seen.” Like the 1848 European revolutions. Hedges even warns liberals, “climate change is the least” of the world’s problems, don’t even think that “voting for Hillary will make any difference.”

Tell Trump the ISIS War will increase taxes, add trillions of new debt

Yes, folks, the GOP neo-con hawks are back at it again, want new wars ... liken Obama to Hitler ... fueling Cheney’s latest bout of extreme hubris ... arming another Bush effort to take over America a third time ... Cheney claims America is weaker today than at the start of his costly ill-fated Iraq War. He should endorse Trump, they both want a new superpower military ready to start new wars, fight revolutionaries, add big debt, run up casualties.

So here we go again. Be exceptional. By fighting bigger wars? Show China we’re more macho? All as the Chairman of the Joint Chiefs Gen. Martin Dempsey is over in Iraq admitting this won’t be a short war, in contrast to Cheney’s claim we’d be in and out of Iraq fast after the shock-and-awe wave, even “greeted as liberators.”

Another $10 trillion loss, long recession dead ahead

Meanwhile, Dempsey admits the current ISIS war could take decades, with multiple deployments, bigger Pentagon budgets. On top of that, retired Navy Rear Admiral Len Hering warns that the risk to America’s national security is growing fast due to global climate change and rising resource conflicts, a product of the endless droughts and food shortages that intensify regional wars.

Yes, bigger wars, more costs. But unfortunately that’s “not a message the White House or Congress wants to hear,” says Foreign Policy’s Dan de Luce. Why? Politicians are lost without a moral compass, playing endless myopic political games, blind, in denial, threatening costly new wars that pile up more and more debt on top of the debt we were forced to borrow from China to finance Cheney’s Iraq War.

Perfect Storm: New president, Dow 5,000, recession, growth drops

All the recent turmoil is but a prelude to a “Perfect Storm” dead ahead: The recent 1,000 point drop ... slowing global economic growth... China’s market crash ... a Fed rate hike ... worst Dow volatility in 100 years ... the slow death of the oil era ... a long costly ISIS War ... droughts ... forest fires ... irrational climate science denialism ... and more.

And history tells us it doesn’t matter who’s elected president. Trump? Sanders? Hillary? Jeb? Doesn’t matter. Markets don’t care. Remember, McCain? Big crashes, recessions happen, about every eight years. Nobody really cares. Why? Once again we’re playing the game of musical chairs, gambling on the race for the 2016 White House.

And everyone’s playing: Everybody. We instinctively know the market’s headed for another fall. Again. Part of the game, right. In fact, knowing a big crash is coming makes the game more exciting, right! So we all just keep playing for another point, praying we can time our exit just before the coming collapse.

If 250% isn’t enough ... keep playing the game ... but play defense

Yes, the market is up over 250% since 2009. Time to get out? Yes, except the Wall Street casinos keep stirring the pot, there’s more life in this bull. So we keep playing for more gains, more thrills, in the race to the 2016 peak.

How big a crash? Twenty percent? Grantham’s 50%? Lose $8 trillion like 2000? Lose another $10 trillion like 2008? Seems nobody really cares anymore. Today’s game of musical chairs reminds us of that fabulous upbeat bank CEO in our favorite Robert Mankoff New Yorker cartoon who is sounding like Trump:

The CEO is at a podium motivating shareholders: “While the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit.”

And that is the answer to Zuckerman’s question: “Who will get this Dreary Recovery going?” Answer: Nobody. Why? The question was rhetorical, he gave us the answer: “Recessions occur about every eight years. And America is ill-prepared to weather the one on the horizon.”

Yes, another recession is “on the horizon.” Also another $10 trillion crash. And another painful GOP loss in the 2016 elections.

http://www.marketwatch.com/story/100-risk-of-a-50-stock-crash-if-donald-trump-wins-nomination-2015-09-04?link=kiosk

MONEY SECRETS...

7 money secrets the rich don't want you to know 

The Motley Fool

Ask most personal finance experts and they'll tell you the secret to becoming rich is no secret at all: Work hard, live below your means and save every dime. The nation's One Percenters, however, might disagree.

There's no shame in a modest lifestyle -- even Warren Buffett lives frugally. But if your goal is to get rich, it's helpful to know these seven secrets the ultra-wealthy aren't likely to share.

1.  Salary isn't the whole story: 

Climbing the corporate ladder will only get you so far; at some point, you reach your earning potential and plateau. The rich know that in order to grow wealth, it's important to make your money work hard for you -- not the other way around. In fact, Robert Kiyosaki, author of the No. 1 best-selling personal finance book "Rich Dad, Poor Dad," built his entire money philosophy around this concept.

Generating income from passive, rather than active, income sources is the best way to do this. Investments that yield passive income include dividend-paying securities, rental properties, profits from a business you do not directly manage on a daily basis -- even royalties on creative work or inventions.

2. Take advantage of time, not timing

If the recent Dow Jones crash proves anything, it's that no one can predict what the market will do tomorrow. The wealthy know this and make no attempt to moonlight as day traders.

"Time is more important to investment success than timing," explained Peter Lazaroff, a certified financial planner who manages portfolios upwards of $10 million for Plancorp, LLC. "Most of the population believes that timing the market's moves is the key to growing rich through the stock market. The wealthy, however, understand that time and compound returns are the most important factor in growing wealth."

Though it might seem counterintuitive, getting rich requires investors to adopt an unsexy buy-and-hold strategy, ride out market fluctuations and ignore speculation.

3. Put it in writing

The difference between having an idea and putting it on paper is often what separates the uber-successful from average folks. And if you equate success with wealth, it might be time to start writing down your goals, both large and small, in order to become rich.

Thomas Corley, author of "Rich Habits: The Daily Success Habits Of Wealthy Individuals," noted that 67 percent of the wealthy people he surveyed wrote down their goals, while 81 percent kept a to-do list. If your goal is to become a multimillionaire, write it down along with an action plan for making it happen.

4. Understand value over cost

According to Justin J. Kumar, senior portfolio manager at Arlington Capital Management, "The wealthy person has three best friends: her attorney, her accountant and her advisor. The wealthy tend to use the law and tax code to their advantage when figuring out how to maximize their wealth, especially over multiple generations, and they are not afraid to spend money up front for counsel to get these answers."

Kumar explained it's common for middle-income Americans to cut corners in order to save money, yet ultimately find the results lacking. "The wealthy look at value over cost, but they are still prudent in their decisions," he said.

5. Eat out less

People who are concerned with saving money often skip the daily latte. The rich enjoy small splurges such as Starbucks whenever they want and instead look at saving from a bigger picture.

Author Paul Sullivan and colleague Brad Klontz, a clinical psychologist with an academic appointment at Kansas State University, conducted research on the difference in spending habits of the 1 percent and the 5 percent. The 1 percent spent 30 percent less on eating out and saved it for retirement instead. "And that, more than the cost of a Starbuck's latte, is what, over time, separates the wealthy from everyone else on the wrong side of the thin green line," Sullivan wrote in Fortune.

6. Be your own boss

Employees work to make their bosses rich. If you're aiming for true wealth, consider starting your own business. According to Forbes, nearly all of the 1,426 people on its list of billionaires made their fortunes through a business they or a family member had a hand in creating.

"Many middle class workers think that starting a business is too risky," noted Robert Wilson, a financial advisor and frequent contributor to CNN, NBC and CBS. "The wealthy understand that what's risky is allowing your time and earnings to be dictated by a boss who couldn't care less about whether you get what you want for your life."

7. Use other people's money

To the average person, "it takes money to make money" might sound like a tired cliche used to justify irrational spending. For the rich, it's a golden rule of wealth.

The key is leveraging other people's money to increase your own wealth.

"Trading time for dollars is a losers' game, especially as technology destroys many jobs that don't require a highly skilled human being," said Wilson. "Using money from banks/investors and hiring people to work for you is a time-tested formula for building wealth, not to mention the tax laws, which heavily favor businesses."

Whether you're fundraising to start a business or flipping real estate for a profit, relying on other people's money to do the heavy lifting greatly increases the return. Of course, it's also riskier than relying on your own funds. But if you follow the sage words of the great Warren Buffett, consider that "risk comes from not knowing what you're doing."

This article originally appeared on GOBankingRates.com.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

http://www.msn.com/en-in/money/topstories/7-money-secrets-the-rich-dont-want-you-to-know/ar-AAdYPlF

WINNING TRENDS IN STOCK MARKETS

“PEOPLE ARE NOT DISTURBED BY THINGS RATHER BY THE VIEW OF THINGS” –ALBERT ELLIS, AN AMERICAN PSYCHOLOGIST WHO DEVELOPEDRATIONAL EMOTIVE BEHAVIOUR THERAPY.

THIS PSYCHOLOGICAL APPROACH IS APT TO MANY BUSINESS HOUSE DECISIONS BUT VERY TRUE IN STOCK MARKETS AS VIEWS BECOME PALE & FEARFUL DURING THE TIMES OF DEPRESSIVE NEGATIVE ENVIRONMENTS, JUSTLIKE NIGHTMARES IN  THICK FORESTS OF ABUNDANT DESOLATION.

THE STOCK-MARKETS CLEARLY REPRESENT A FRIGHTENING CLUMSY PICTURE AT TIMES WHEN VOLITITIY AT ITS PEAK & FALL CONTINUES!!, NO MATTER HOW SEASONED SOMEBODY BUT TO OVERCOME THE NERVE WRENCHING FEAR AND FORESEE THE FUTURE BECOMES DREADFUL.

TO AVOID UNCERTAINTIES IN STOCK MARKETS ARE NOT AT ANYBODY'S COMMAND OR CAPACITY BUT EVERY PARTICIPANT'S WISH....

TO MITIGATE THE FEAR AND UNDERSTAND THE EMERGING OPPORTUNITIES IN CHAOS, THE FOLLOWING APPROACHES CAN BE ADOPTED FOR BETTER RESULTS AND TO KEEP PACE WITH THE MARKET TRENDS...!!

A) CONVERGENT PROCESS:

THIS APPROACH IS MORE WIDELY ACCEPTED AND FOLLOWED BY THE FIIs, DIIs AND ESPECIALLY FOR THAT MATTER MORE PRECISELY BY HEDGE FUNDS. THESE HIGH RISK SEASONED CUTTING EDGE SMART PEOPLE PLACE HIGH BETS WITH AN ANTICIPATION OF HIGH RETURNS. THE BLOOM AND GLOOM CO-EXIST MANY A TIMES BUT THEIR SPIRITS ARE VERY HIGH.

HERE, STOCK PURCHASE CONCENTRATION IS SO HIGH THAT HUGE MONEY PUMPED AND LARGE CHUNK ACQUIRED AT A REASONABLE PRICE. THE COMPANY FUNDAMENTALS, ECONOMIC &BUSINESS TRENDS AND OTHER IMPORTANT PARAMETERS ARE LITTLE KNOWN TO OTHER RETAIL PARTICIPANTS BUT GET SURPRISED WHY AND HOW THESE COUNTERS ARE HOLDING ON TO THE TOP. 

LAST BUT NOT LEAST, THE VERY IMPORTANT MARKET MANAGEMENT MECHANISMS ARE PUT IN PLACE TO SEE THE PRICES RISE STEADILY AND GRADUALLY TO A LIMIT AND THEN A FINAL SHOOT UP …?. UNFORTUNATELY THE GREEDY POOR TRADERS AND RETAIL INVESTORS GET TRAPPED WHEN PARTICIPATE HEAVILY AND OFCOURSE THE WELL INFORMED SEEK AN EXIT…???

B) DIVERGENT PROCESS:

MAINLY FOLLOWED BY HNIs AND SMALL FUND HOUSES. THE PHILOSOPHY IS TO PROTECT THE CAPITAL AND INCREASE PROFITS IN BABY STEPS. THESE INVESTORS NEVER KEEP ALL EGGS IN ONE BASKET BUT PREFER DIFFERENT SECTORS. THIS DIVERGENT MEANS OF MAKING MONEY CAN OFFER SOLACE THAN ANY OTHER MODEL AS THE MARKET WAGGERIES ARE WELL TAKEN CARE. 

THESE PLAYERS ARE MODERATE IN RISK TAKING APPROACH, HAVE GOOD CONFIDENCE IN MARKETS BUT FEARFUL IN APPROACH. THEY ADOPT LONG-TERM PLAY WITH AN EYE ON SHORT-TERM GAINS, PLACE THEM IN GOOD POSITION AS THEY OFTEN TAKE-OUT PROFITS AT HIGHER LEVELS AND RE-ENTER AT LOWER LEVELS. SO, SAFE AND SECURE ALL THE TIME.

C) CHANNELLED PROCESS:

THE LADDER LIKE APPROACH IS ADOPTED BY SMART INDIVIDUALS TO ENSURE SUCCESS AT EVERY MOVE  WITH A LIMITED RESOURCE/MONEY. THEY KEEP MAINTAIN A WINNING STEAK ON BOTH THE DIRECTIONAL MOVES, SAIL ALONG WITH BULLS AND BEARS AS THEIR ADAPTABILITY & LIQUIDITY AT HAND ALLOWS SUCH FACILITY. THEY KEEP INCREASE VERY CALCULATED BETS, ALSO MAKE SUCCESS, A COMMON PHENOMENA LIKE CLIMBING A LADDER.

THESE PLAYERS ARE KNOWLEDGEABLE AND QUITE SMART IN CATCHING TRENDS IN THE MARKETS AND PLACE THEIR BETS SAFELY, ALSO MAKE SOME GOOD MONEY. THE PLAYERS SUCK EACH EMERGING OPPORTUNITIES IN STOCK MOVEMENTS BUT THEIR WELL ESTABLISHED APPROACH IS NOT KNOWN IN THE MARKET CIRCLES BUT MAKE DECENT COOL MONEY.

D) ZIG-ZAG JUMPING PROCESS: 

THIS APPROACH IS MOSTLY ADOPTED BY THE DAY TRADERS AND SWING TRADERS, ENJOY BUYING AND SELLING MANY A TIMES DURING THE DAY.THESE ENTHUSIASTIC TRADING PLAYERS ARE BACK-BONE TO MARKET LIQUIDITY AND FOR STOCK-TIPS ADVISORS. THEY KEEP ENGAGED EVERY TIME AND EACH TIME THEY TAKE A CALL AS THEIR GAME IS HIGHLY VOLATILE AND NO-BODY UNDERSTANDS WHY A BUYING IS MADE AND INSTANTLY A SELLING IS INITIATED. MANY A TIMES THEY BUY AT ONE COUNTER AND ALSO SELL ANOTHER SCRIP. ULTIMATELY, THEY ENJOY PARTICIPATION RATHER THAN MAKING MONEY.

THESE SMALL TIME RATHER INSTANT PLAYERS NEVER MAKE HUGE MONEY STORED IN THE MARKETS BUT LOSE MONEY FOR SURE, BECAUSE OF BUNDLE OF CONFUSIONS!. THE MORE THEY PLAY THE MORE THEY PAY. THEY HARDLY MAINTAIN ANY ORDER/METHOD, FIND NO TIME TO STUDY, PREFER EXTERNAL DEPENDENCY, MAINTAIN ADAMANT BEHAVIOUR TO A LOSING DEALS, RELY ON IRRATIONAL MEDIA COVERAGES & LIVE IN RUMORS AND PLACE HUGE BETS, BELIEVE IN CARRY ALONG WITH THE MOB IN THE MARKETS...ETC. ALL THE MORE, TAKE VERY FRAGILE DECISIONS AND UN-MINDFULLY INVITE HIGH-RISKS, UNFORTUNATELY GO INTO DUST...UN-NOTICED!!!!

SENSEX-RUN

Year	Open	High	Low	Close
1991	1027.38	1955.29	947.14	1908.85
1992	1965.68	4546.58	1945.48	2615.37
1993	2617.78	3459.07	1980.06	3346.06
1994	3436.87	4643.31	3405.88	3926.9
1995	3910.16	3943.66	2891.45	3110.49
1996	3114.08	4131.22	2713.12	3085.2
1997	3096.65	4605.41	3096.65	3658.98
1998	3658.34	4322	2741.22	3055.41
1999	3064.95	5150.99	3042.25	5005.82
2000	5209.54	6150.69	3491.55	3972.12
2001	3990.65	4462.11	2594.87	3262.33
2002	3262.01	3758.27	2828.48	3377.28
2003	3383.85	5920.76	2904.44	5838.96
2004	5872.48	6617.15	4227.5	6602.69
2005	6626.49	9442.98	6069.33	9397.93
2006	9422.49	14035.3	8799.01	13786.91
2007	13827.77	20498.11	12316.1	20286.99
2008	20325.27	21206.77	7697.39	9647.31
2009	9720.55	17530.94	8047.17	17464.81
2010	17473.45	21108.64	15651.99	20509.09
2011	20621.61	20664.8	15135.86	15454.92
2012	15534.67	19612.18	15358.02	19426.71
2013	19513.45	21483.74	17448.71	21170.68
2014	21222.19	28822.37	19963.12	27499.42
2015	27485.77	30024.74	26776.12	27011.31

US Fed: India safe but for how long?

US Fed: India safe but for how long?Thursday, 19 March 2015 - 11:00am IST | Place: Mumbai | Agency: dna webdesk

• 
  

  Shubhashish

This capital flight could also impact currency markets and rupee might lose some of its value like it did a couple of years ago.

• Representational illustration File Photo dna Research & Archives

The much-awaited statement from US federal Reserve is here and the emerging markets globally are rejoicing. Dollar was weakened against global currencies (Rupee opened 34 paise stronger) and thestock markets are elated (BSE and NSEjumped over 1% on Thursday morning). 

The press release of US Federal Reserve stated, "The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction." What this effectively means is that the Fed is not raising rates at the moment but is not averse to the idea in near future. 

It said, "When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2%." 

What elated the stock markets globally is Fed's statement that it might still keep rates unchanged even after employment and inflation are in comfort zones. The statement read, "The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run." 

But what came as a music to ears of stock markets was the announcement that a rate hike in April meeting also remains unlikely. 

Global stock markets, especially emerging markets (incluing India), were expecting a huge sell-off from foreign investors if the US Fed signalled rate hike. However, as its possibility is ruled at the moment, the markets cheered the move. 

The last time Fed raised rates was in 2006. 

What this means for India? 

Raghuram Rajan, governor, Reserve Bank of India:

Even though Indian stock markets remain in a precarious situation as foreign money dictates the direction of the market, Raghuram Rajan, governor, Reserve Bank of India (RBI) remained confident. 

Even though he did not rule out the possibility of volatility in the Indian stock markets if US indeed raised rates, he assured that the country is fully prepared to deal with any situation arising out of US Fed's statement. 

Couple of years ago, when the US Fed signalled tapering off of its quantitive easing program, dollars flew from the stock markets sending the markets in a tizzy and eroding rupee's value against the dollar. 

However, India's current account deficit (CAD) at that time was over 4% and forex reserves to tackle the capital flight were low. 

This time around, India's CAD is firmly in control and is expected to be 1.2% of GDP in the current fiscal and RBI has built up record dollar reserves of $337.8 billion. 

Christine Lagarde, chief, International Monetary Fund (IMF): 

Lagarde, who was in India on a two-day tour earlier this week said that India is a bright spot in the gloomy global economy. She said that emerging markets including India must prepare itself to risks arising out of the US Fed rate hike. 

She warned that US might begin to unwind its monetary stimulus later this year and it might cause volatility in the stock markets giving rise to stability issues in the emerging market economies. 

She added that the central banks must intervene with foreign exchange interventions and supporting domestic economy with liquidity push. 

Lagarde said that Indian companies with high leverage, especially in dollar loans, are likely to get affected when US Fed begins to hike rates. 

How will US rate hike affect India: 

US rate hike would mean that foreign money would leave stock markets in India and go back home for safer avenues. This would bring volatility in the Indian markets.

This capital flight could also impact currency markets and rupee might lose some of its value like it did a couple of years ago.

Rupee strenghtened today morning against dollar simply because US Fed ruled out rate hike for April at this weakened dollar. An opposite effect will happen when rate hike actually takes place and money flies back to US from Indian markets.

Moreoever, Indian companies don't have proper hedging strategies in place as they expect rupee dollar to be in 62-63 zone. Any fall in rupee is likely to affect their balance-sheets on the back of currency losses.

India is safe from the volatility at the moment but any rate hike by the US Fed could cause a ripple affect beginning from the stock markets to impacting the profits of companies because of fall in rupee's value against the dollar.

India's external debt, which is ballooning at the moment, would increase further and falling exports would make the matters worse. 

India's exports during April-February period stood at $284 billion as against imports of $411 billion. Export growth, earning precious dollars, continues to be muted and is only helped by a lower import bill becaue of lower oil prices. 

Minister of State for Commerce and Industry Nirmala Sitharaman said that exports are declining because of muted global demand, stagnation and deflation problems in European Union.

http://www.dnaindia.com/money/report-us-fed-india-safe-but-for-how-long-2070132