Shanghai exchange to get a boost

The Chinese government has signalled a move that would make Shanghai stock market richer by about $30 billion and give credence to long-held suspicion that Shanghai is being consciously built up as a serious competitor to the well-entrenched market in Hong Kong.

The latest move involves giving permission to China Construction Bank to list at the Shanghai exchange to raise $8 billion. Lined up behind CCB for similar listings are "red chips" like PetroChina and China Mobile.

The listing by such "red chips" is expected to boost the market capitalisation of Shanghai by $30 billion, industry experts estimate. Analysts also believe that some foreign companies might eventually be tempted to list in Shanghai instead of the Hong Kong platform to be closer to product markets and please the levers of power in Beijing.

Companies based in the Chinese Mainland are responsible for nearly 70% of the market capitalisation in Hong Kong. Any move to encourage Hong Kong listed companies to go for a second listing in Shanghai is bound to impact its market, sources said.

For historical reasons, many of China's state-owned companies have been listed in Hong Kong and a few of them also went for secondary listing at exchanges in New York and London. These "red chips" are not traded in Chinese exchanges of Shanghai and Shenzhen. As China grew into a economic mammoth in recent years, the Hong Kong market emerged as the biggest beneficiary by providing Chinese companies with an international platform to raise funds.

This was resented by a section of the people and the political system, which felt that the local markets should be given an opportunity to grow in tandem with the country’s industrial development.

But the government found it extremely difficult to support the local markets as the stock index remained stagnant for four long years until it began to raise it head only last year.

This is when the government launched a “return of the prodigal” programme to persuade Hong Kong-listed Chinese companies to seek an additional listing in the home country. It began by pushing the Industrial and Commercial Bank of China, the nation’s largest bank, to go for an IPO in Hong Kong and Shanghai, simultaneously.

The IPO raised a world-record beating $19 billion with some $6 billion being contributed by investors in Shanghai.

There has been a lull until the announcement allowing CCB to go for an IPO. The bank would raise $8 billion if it manages to sell shares at current price of 87 cents ($0.87) a share, sources said.

Link Times

Long-term investors have a bull ride

Indian equity markets are dancing to subprime tunes, giving investors sleepless nights. But if you are a mutual fund investor, you might as well take a vacation. In the past five years, 81% of diversified equity funds managed to outperform (give higher) Sensex returns. This is an encouraging statistic, underscoring the need for investors to look at a long-term investment horizon. For short-term investors though, there are lots of grey areas. In fact, there is only bad news, since the extent of outperformance has been widely fluctuating. In 2007, 68% of equity funds have managed to outperform the Sensex. This is an improvement from the 21% level in 2006 and 40% in 2005. A historical study reveals that fund managers have traditionally relied on mid-caps to beat the Sensex. So equity funds gave higher returns than the Sensex whenever mid-cap indices outperformed large-cap indices. Mid-caps, as measured by the S&P CNX Midcap, gave higher returns than the Sensex in the calendar year 2002, 2003 and 2004. And in all these years, the extent of outperformance was high, with upwards of 90%. But subsequently, in 2005 and 2006, the Sensex ended up giving higher returns than mid caps. This led to many equity fund managers, especially those heavy on midcaps, underperforming the Sensex. Only 40% of equity funds managed to beat the Sensex returns in 2005 and 21% in 2006. During 2007, midcaps have managed to give slightly higher returns than the Sensex so far and the extent of outperformance has improved tremendously. Is the fact that equity fund performance is linked to mid-cap performance a cause for concern? Not really for long-term investors. While over the single year periods, there has been greater vacillation in performance, the statistics are encouraging over the long-term periods. For instance, in the past five years, 81% managed to beat the Sensex returns. It is 59% and 58%, respectively, for one and three year periods. Another interesting trend has been that of fund managers finding it relatively easy to beat the Sensex in a bull run than in a bear run. In the past 15 years, there has been four years of 10% plus correction in Sensex values in 1995, 1998, 2000 and 2001. And except during 1998 — when the outperformance was 90% — in all the other years, the outperformance figures were 50% or lesser. With bearish phases existing in the current market, this is a cause of concern for the short-term investor. With the launch of many variants of equity funds, outperformance might become a tad tougher. This is because a mid-cap fund would be benchmarked with a mid-cap index and not Sensex or BSE 200. Similarly, a broad-market fund would benchmark with a broad-market index like BSE 200 and not a large-cap index like Sensex. While there used to be only one equity fund in the past, which invested across market caps, now there would be a greater focus. Expect lot of action ahead for active fund managers in the equity market.

Link Times of india

Asian stocks continue to slip
Asian stocks tumbled to their biggest two-day drop in a year after Australia’s Rams Home Loans Group said it was unable to refinance $5 billion of debt amid a widening credit crunch. South Korea’s Kospi index plunged 6.9%, its largest loss since June 2002. Macquarie Bank, Australia’s biggest securities company that’s lost almost a third of its value in the past four weeks, led a slide in financial stocks. Toyota and Samsung fell after reports showed US home sales dropped to a four-year low and prices declined in a third of the nation’s cities. BHP Billiton, the world’s biggest mining company, slumped as concerns about slower global growth dragged commodities prices lower. "Blood is hitting the streets, everyone seems to be panicking, and there’s reason to panic," said Patrick Chang, who helps manage $4.5 billion at CIMB-Principal Asset Management Bhd in Kuala Lumpur. "There’s been so much blow-up, we don’t know when it’s going to end. Liquidity is drying up.”" The Morgan Stanley Capital International Asia-Pacific Index lost 2.5% to 141.89, the lowest since March and its biggest two-day decline since June 2006. About 10 stocks retreated for each that gained on Thursday as benchmarks slid across the region. Japan’s Nikkei 225 Stock Average dropped 2% to 16,148.49, its lowest close since November. Sony Corp led Japanese exporters lower after the yen strengthened to the highest against the dollar since March. South Korea’s Kospi plunged the most in five years following a one-day holiday on Wednesday when the MSCI Asia index lost 2.5%. The Standard & Poor’s 500 futures were 0.9% lower on Thursday. US stocks fell on Wednesday on speculation that Countrywide Financial, the nation’s biggest mortgage lender, may be forced into bankruptcy. The S&P 500 erased its gains for the year, dropping 1.4%. US treasury secretary Henry Paulson said financial turmoil will "extract a penalty" US growth rates, yet the economy is strong enough to weather problems without falling into recession, the Wall Street Journal reported on Thursday. Rams Home Loans Group said it was unable to refinance $5 billion of short-term US loans because of a "lack of market liquidity" caused by a global credit rout. It plunged 36% to 86.5 Australian cents, 65% lower than the price at its initial offering last month. "It’s a selling panic," said Mark Mobius, who oversees $30 billion at Templeton Asset Management. "We’re seeing a lot of negative news with very few positives." Countrywide may go bankrupt if creditors force the company to sell assets at depressed prices or investors lose confidence in its ability to raise cash, Merrill Lynch said. KKR Financial Holdingssaid it may lose up to $290 million from a drop in the value of mortgage-backed bonds it owns.
link timesofindia

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Investment in Art...............

Earlier art is made for creativity, now art become investment instrument.

Now a days every discussion starts about investing in art??? Why so….

Many people are planning to invest in art because rapid growth seen in art market over the past few year. Many countries, the art market grown 3-4 percent, studies shown Indian art industry grown 30-40 per cent. Earlier people felt that investment in art will not give good investment, have started investing in art now because of its appreciation.

International auction houses such as Christies and Sothebys have recently began to auction contemporary art at higher price.

Increasing transparency and professionalism of art market has made many art funds and serious investors wants to invest in art. But the people should know the value and its potential growth of art work.

Link Christies, Sothebys

Consumer buying:

Climate change may influence consumers' buying pattern ???

Press Trust of India Writes

Growing concerns over environmental issues is already changing consumers' buying pattern in many developed countries and it should not be too far before the Indian buyers also start following this trend. "It would be the next logical step in the cycle of change," Kushal Yadav with Centre for Science and Environment said.

Indians are switching over to energy-efficient CFL lights from the traditional bulbs, he said, adding although it is more out of economic consideration than of environmental concerns.
According to a study by Germany's market research firm GFK released last week, consumers in that country would prefer to invest in more environment-friendly technology at their homes because of their concern over climate change.

"In future, consumers will stimulate domestic demand with their intentions to change their own shopping habits and investing in environmental-friendly technology for the home," the GFK research said.

Yadav said: "Change is not stand alone, it is regulation which drives the changes." He said regulation would bring in faster changes towards environment-friendly products. There are, however, some food product manufacturers who would prefer to pack their goods in environment-friendly material even though they are not bound by any regulation.

Vijay Gupta, owner of President brand of spices, said: "I would prefer to pack the products in card board than using plastic material." Four out of five consumers in Germany intended to stop keeping their electrical appliances on standby and replacing traditional light bulbs with the energy-saving variety.

The GFK research study also found 58.5 per cent people who showed willingness to buy new domestic appliances which use less power to cut down energy consumption and reduce carbon dioxide emissions. Interestingly, concerns for climate change may reduce meat consumption as 28 per cent women and 15 per cent men in the survey showed their preparedness to change their eating habits.

Meat consumption is linked with animal husbandry, which is also considered a major reason for methane gas emission that contributes to global warming.

"At least one in five consumers are currently prepared to cut down on meat consumption," the study said.
The GFK study said 50 per cent of the people surveyed expressed scientific portrayals of climate change were realistic while 35 per cent believed the problem is even more serious.
However, only 13 per cent of the German people said the debate was highly exaggerated.
The Intergovernmental Panel on Climate Change (IPCC) agreed that climate change was already under way and damaging the nature.
The IPCC, represented by more than 100 countries of the world, last Friday blamed global warming on greenhouse gas emissions while predicting desertification, droughts and rising sea levels in tropics, from sub-Saharan Africa to the Pacific islands.

Link PTI News , The Hindu

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Global Virus: Surge in inflation causes worry

Press Trust of India News (PTI) writes

India is not only the country where rising prices of essential commodities is giving consumers and policy makers sleepless nights. The surge in inflation is a major cause of concern even for giants like the US and China and rich nation like Britain and Singapore. Inflation based on wholesale prices in India has been hovering around 6-6.5% for past few weeks, well above the reserve Bank’s target of 5-5.5% for this fiscal. This is despite various efforts by the government and the central bank to rein it back within the limit. Even measures like repeated hike in interest rates and ban on future trading of certain commodities like wheat and rice have failed to yield the desired results in India.

In the UK, The measure of annual consumer price inflation rose to 2.8% in February from 2.7 a month ago, well above the government’s target of 2% as per UK’s office for national statistics. The largest upward impact on CPI annual rate came from transport cost due to increase in air fares in February, particularly for traveling to European destinations. Back home in Asia the inflation rate is inching closer to the tolerance level of 3%, in China where it rose from 2.2% in January to 2.8% last month. Similar to India, soaring inflation in the world’s fastest growing economy has put pressure on the Chinese central bank to raise interest rates. Food price a major component of Chinese CPI basket, were up 6% for the month. February data bring inflation for first two months of year to 2.4%, below the government target of a sub 3% rise in CPI index. The world’s largest economy, the US is also experiencing a spurt in CPI index, the benchmark inflation measure.

According to federal open market committee (FOMC), recent reading on core inflation have been somewhat elevated. Although inflation pressure seem likely to moderate over the time, the high level of resource utilization has potential to sustain those pressure. In this situation, the committee’s main policy concerns remain that inflation will fail to moderate as expected. Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth.

However in Japan, the world’s second largest economy, the central bank is faced with a different situation, deflation. Core inflation which excludes food items, fell to zero in January while the Bank of Japan is tightening interest rate despite any increase in prices

Link Press trust of India

i was away quite long time i resume writing
Technorati Profile

Stock Markets ......

Many people panic when the share markets go down, and cheers up when the markets go up. There are always winners and loosers in the markets. The best way to keep cool and have steady returns is to be long term invester and not investing the share which are not fundamentally and technically sound and keep tracking of the markets after investment.

The three mantras while investing in stock market as per my opinion is

• When every body purchses you sell.
• When every body sells you purchase.
• Never keep any attachment with shares.

Can we expect “common man's” budget from Finance minister??

Can we expect “common man's” budget from Finance minister??

Every body in India is anxiously waiting for what are the taxes imposed and what tax incentives finance minister of India is imposing in union budget.

In India common man is much burdened with increasing taxes and increasing prices. Inflation is touching nearly 7%. Government is increasing the interest rates to restrict money supply.

Finance ministry may help the common man and salaried employees if he can give the following.

Non tax slab upto 2 lakhs
Income tax slab 5% from 2 lakhs to 2.50 lakhs
Since the fuel prices are increasing increase the exemption under conveyance allowance upto Rs 1000

Exemption under 80C

Exemption limit increase from present 1 lakh to 2 lakh
Working women from 1.35 lakh to 2.35 lakh
Senior citizen from 1.85 lakh to 2.85 lakh
Age limit for exemption under this section to senior citizen should be decreased from 65 to 60

Exemption under 80D

Deductions under mediclaim policies should be increased from Rs 10000 to 20000

Income Tax made simple……………..

Every Indian worries when the financial year comes to an end, the worry is how much tax to be payable, how to calculate tax?????
Read this

Benjamin Franklin opined: “In this world nothing is certain but death and taxes.”

The story of taxes and the civilized man go back a long way. Taxes were levied when Pharaohs ruled Egypt 5,000 years ago. In India, a treatise on taxation existed 2,300 years ago in the form of Chanakya’s Arthashastra. It emphasized on fairness and equity, recommending that the affluent pay higher taxes as compared to the not so fortunate.

The modern system of Indian taxation started taking shape from the year 1922. After Independence, the Income Tax Act in its present form was passed in 1961. For the purpose of taxation, the total income of an individual’s income has been divided under five heads: salaries, house property, profession, capital gains and other sources. A number of deductions are allowed form the gross total income computed on the basis of individual income accruing under the five heads. The deductions allowed are usually in line with the fiscal policy of the government.

COMPUTATION OF NET SALARY
Basic Salary
Commission and bonuses
Allowances
Conveyance
HRA
Leave encashment
Performance rewards
Residential accommodation
Motor car
Gross salary
Less
Deduction from salary
Entertainment allowance
Professional tax
SALARY INCOME CHARGES TO TAX

COMPUTATION OF INCOME FROM HOUSE PROPERTY
Annual value
Less municipal tax
Net annual value (NAV)
Deductions
Statutory deduction
(30% of NAV)
Interest on loan
INCOME FROM HOUSE PROPERTY

COMPUTATION OF CAPITAL GAINS
Sales value
Less
Acquisition cost
Improvement cost
Transfer cost
CAPITAL GAINS CHARGEABLE TO TAX

BUSINESS/PROFESSION
Gross receipts
Less
Expenses incurred to earn the income
INCOME CHARGEBLE TO TAX

INCOME OTHER SOURCES
Interest on bank or company deposits
Interest on National Savings Certificate
Kisan Vikas Patra or debentures and bonds
Interest received on delayed tax refunds
Income from royalty
Winnings from lotteries
OTHER INCOME CHARGEABLE TO TAX

SECTION 80C PRODUCTS
Bank deposits.
Employee Provident Fund (EPF). .
Public Provident Fund (PPF).
Home loans:The total amount eligible for deduction is up to Rs. 1 lakh a year for the principal amount.
Children’s fees: Parents can claim a deduction for tuition fees for a maximum of two children within the overall limit of Rs. 1 lakh. However, payments towards development fees or donations to the institution are excluded.
National Savings Certificates (NSC).
Equity-linked savings schemes (ELSS).
Life Insurance.
OTHER DEDUCTIONS
Health insurance: Under Section 80D, medical cover premium is tax-deductible up to Rs. 10,000, with an additional deduction of up to Rs. 5,000 if the policy is in the name of a senior citizen (65 years or older) and the premium is paid by him. If someone below 65 buys a plan for his dependents, he can avail benefit upto Rs. 15,000.
Educational loan: The interests on loans taken for higher education are also eligible for deduction from your total income under Section 80E. There is no monetary ceiling on the interest you can claim as a deduction. The loan must have been taken from a financial institution or an approved educational institution. Remember, repayment of loan or interest on loans taken by parents for higher education of their child is not eligible for deductions.
Charity:To avail tax benefits under Section 80G, donations must be made only to specified trusts. The tax breaks vary according to the trust to which you have donated.
Medical treatment: Any expenditure for the medical treatment (including nursing) of a handicapped person, training and rehabilitation of a person suffering form a permanent physical disability (including blindness) or form mental retardation, qualifies for a deduction under Section 80DD upto Rs. 50,000. A life insurance policy bought for the benefit of such a handicapped person is also eligible for this benefit up to Rs. 50,000. In case the disability is severe, the claim can go up to Rs. 75,000.

DEDUCTIONS AVAILABLE

Sections When, where and how much of deductions
80C Rs. 1 lakh in specified instruments like life insurance and ELSS
80CCC Pension plans of life insurance companies; 80C limit stands reduced

80CCC investment
80D Rs. 10,000 deduction on mediclaim, Rs. 15,000 for senior citizens
80DD Rs. 50,000 reduced from total income of a person handicapped dependent
80DDB Rs. 40,000 and Rs. 60,000 (sr citizen) for expenditure on treatments ofspecialdiseases
80E Interest on education loan – entire amount tax deductible
80G Donations (all donations don’t qualify for 100% deduction)
80GG Deduction according to formula for rent paid for housing
80U Rs. 50,000 deduction from total income for handicapped persons


HOW MUCH TO PAY AS TAX
TAX RATES- FOR ALL EXCEPT SENIOR CITIZENS AND WOMEN

Taxable income (Rs.) Tax rates Surcharge Education cess

Upto 1 lakh Nil Nil Nil
1 lakh to 1.5 lakh 10% of Rs. 50,000 Nil 2% of tax
1.5lakh to 2.5lakh Rs. 5,000 + 20% of Rs. 1 lakh Nil 2% of tax
2.5lakh to 10lakh Rs. 25,000 + 30% of

(taxable income minus Rs. 2.5 lakh) Nil 2% of tax
10lakh and above Rs. 2.5 lakh + 30% of

(taxable income minus Rs. 10 lakh) 10% of tax 2% of tax