Asia Headed Towards Becoming Largest Corporate Market by 2015

Global consulting firm McKinsey & Co released a report stating that global corporate and investment banks will get almost 50% of their revenues (around $799 billion) from Asia by 2015. The leading countries will be China and India. In 2010, the revenues originating in Asia constituted nearly 33%, or $442 billion.

The report, entitled ‘Asia: The Future of Corporate and Investment Banking’, stated: “The surprisingly strong economic health of Asian economies in 2010 saw the risk-adjusted corporate and investment banking (CIB) revenues from the continent, touching nearly $442 billion, just under a third of the global total. But by 2015, this revenue pool will rise to about $790 billion by 2015 or 45% of the global CIB revenue.”

Akash Lal, McKinsey partner, said “Asia will become the largest and fastest growing region in the wholesale banking universe by 2015.”

He continued, explaining that the market will change dramatically as new investors, more demanding customers and multi-regional businesses join the industry. According to Emmanuel Pitsilis, senior partner and Asia corporate and investment banking practices leader, the biggest challenges in the growing industry will be regulation and very intense competition.

“Global banks will have to find a path to become more Asian by making the right investments from both business as well as geographical perspectives, apart from building a business model that is both profitable and durable,” he explained.

India Investment Drop

Last month saw an all-time foreign institutional investment (FII) drop in India through participatory notes (P-Notes).  As a recent report detailed in Business Standard noted, the figures dropped to less than 10 percent for “the first time since 2003.”  According to director of institutional equities and chief strategist of Padmakshi Financial Services, Sailav Kaji, “many P-Note investors had built up short positions in the earlier months. These shorts would have got squared off in the rally and internally adjusted,”

There was an increase of P-Note exposure from January to May from Rs 1.34 lakh crore to Rs 1.61 lakh crore “without corresponding inflows into the Indian markets.”  But then the following month things took a nosedive.  Between January and May, although Indian markets were extremely popular, receiving “net inflows of around Rs 700 crore, suggesting most positions built up through P-Notes could have been short positions.”

June Jaunts

So what happened in June?  What happened from the high of the previous five months?  It wasn’t great when the country encountered deregulated diesel prices.  That was probably what led to the Sensex rally that according to brokers, “consumed many of these shorts.”  Then there were worries that there would be another P-Notes crackdown which caused P-Note investors to move their monies to the standard FII route.

Further, P-Note issuers were required to give details of the notes’ end beneficiaries on “an upfront basis regularly” At the start, investors who wanted to remain anonymous, or those who didn’t make an official registration, would veer towards P-Notes.  There has now been a request that P-Notes will only be given to those individuals “regulated by an appropriate foreign regulatory authority and should be issued after compliance with ‘know your client’ norms.”  Once these rules were put in place, there was an average of 15-16 percent drop of P-Notes’ share during the bulk of 2009/10, “down from 35-38 percent in 2007/8.

Good News for Indian Economy

When a country gets a big investment, not only is it good for the company bringing the capital, it’s also great for the recipient country.  Thus, both India and Tata Consultancy Services (TCS)  should be smiling right now, according to a recent report in Money Control.  The AMR contract (automation of metering and billing) has just been awarded to TCS “of high tension industrial consumers in Haryana.”

According to “an official spokesman of power distribution company Uttar Haryana Bijli Vitran Nigam (UHBVN), the contract will involve 3,200 consumers in 11 districts.  These include: Panchkula, Ambala, Yamuna Nagar, Kurukshetra, Kaithal, Karnal, Panipat, Sonepat, Rohtak, Jhajjar and Jind.”

In addition, the project is meant to be finished in the next half a year.  Much of the work will be based on the most up-to-date GPRS technology and is the first time this has been used in Northern India (with the exception of Delhi).


All the HT Industrial consumer premises will receive GPRS modems and meter data “will be transferred to server installed in Head office at Panchkula through these modems.”  Through the project, the consumers’ meter reading will be “transferred online to the headquarter.”  What’s great about the project is that it will require no human intervention because of the use of “automatic meter reading, billing and regular data analysis.”  As well, there will be the opportunity for close observation of the consumption of electricity that will “help the UHBVN in preventing the losses due to pilferage of power.”

Improved Accounting

In addition, this project is set to improve the accuracy of billing and make savings in manpower.  In addition, the transfer of power factor will be covered, as well as “time of day consumption, tamper events and half load survey data etc.”

India Gets Mega Software Investment

When you have money, you can use it to make more money.  That’s how the rich get richer.  And it seems that the largest software services provider in India – Tata Consultancy Services (TCS) – is doing just that.  For the 2011-12 financial year, TCS will be making an investment of Rs 2,300 crore.  Nonetheless, in a report in Money Control, it seems that the company was questioned as to why it hadn’t given out a special dividend.  To which Ratan Tata responded, “it’s true that I could have paid you more this time. But we would also like to have some more liquidity in case we see opportunities to acquire companies. But eventually, you will get more dividend once we do that.”

TCS Attacks

The company has also been attacked as of late too.  But Tata insisted that the investigation of his company for “tax benefits on onshore services,” was unwarranted.  He pointed out that “we have not received any such notice. I am not too sure of the veracity of that report. Unfortunately, people read these reports and assume that they are gospel truth. But that is simply not true.”  Indeed, he also noted how TCS’s attrition rate was on a higher scale than “the industry average.”  He pointed out how well the company motivates its employees, by giving them an opportunity to “bag an overseas assignment, which gives them experience of working abroad. We are the largest when it comes to giving employees overseas assignments. So we do keep them motivated enough.”

Expanding Markets Globally

While it’s true that much of the TCS markets are in North America, the company is now also “in the process of doing more business in Europe and other markets. About revenue from large clients, we need big anchor clients.”


India Investments Encouraged in China

Beijing Seminar Good for Investment

At a seminar today held in Beijing, India invited Chinese companies to come and make investments in China. The seminar, entitled, ‘India-China Business & Investment Seminar- Opportunities in IT, Engineering & Allied Sectors,’ was organized by Municipal Government of Yangzhou and Confederation of Indian Industry (CII) and Indian Consulate in Shanghai. The aim of the seminar is to encourage Chinese companies to make investments in India while giving them an overview of the country’s “FDI policy, basic tax and business laws, financing options,” facilitating a more informed decision prior to making the investment.

According to an article reporting on the seminar, attendees at the conference included: “Chief Representatives, CEOs and senior executives of Aditya Birla Group, BHEL, ICICI Bank Ltd , Infosys, Jiangsu Sterlite Tongguang Fiber Co Ltd, Elgi Equipments, L&T, MphasiS, Mahindra Satyam, NIIT, PTC Global, SBI, TCS, Tata Steel , Thermax, Wipro Infrastructure Engineering and CII.”

Increased Indian-Chinese Cooperation

It is hoped that there will be further cooperation between the two countries in the following areas: IT and Engineering, and more. According to Vice-Mayor of Municipal Government of Yangzhou Wen Daocai, this “joint initiative [is] offering a unique opportunity to Yangzhou based companies to engage with Indian companies.” New policies will be encouraging Chinese companies through helpful policies, fast approval and financial aid. In addition, through various components like growth, manpower and macro-economic stability to name but a few, India is now able to offer “attractive returns to prospective Chinese investors.”

Anticipated Investments

There are many opportunities these days for Chinese companies to invest in India, especially in the areas of infrastructure, freight, subway and SEZs and currently there is an anticipated trillion dollars worth of such investments. At the seminar, both Indian and Chinese companies were given the opportunity to “forge new business alliances as well as promote two-way investments.”

Global Financial System Reform?

BRIC Leaders Meeting

BRIC nation leaders (Brazil, Russia, India and China) are meeting up in China for a one day conference. BRIC is actually a bit of an inaccurate description now (it should really be changed to BRICS) since South Africa recently joined. As a unit they have both economic and political influence today, and also form part of the G20. The topic to be addressed will be reforming the global financial system since the nations comprising the BRIC make up 40 percent of the world’s population and nearly a fifth of its growth. Given these statistics, the BRICS feels they deserve a “greater say in global affairs.” While BRICS influence has increased since the start of the global financial crisis, there is still much more to be done.

BRICS Status

The BRICS will be discussing rules regarding international trade but there is no guarantee that it will hold much weight. BRICS are in favor of free trade and against protectionism, but in general don’t agree on much. Since all BRIC countries fared well vis-à-vis the 2008 economic crisis, they have already proven themselves. India has a global economic status vis-à-vis being a service provider and engages in the most trade with China although has a large trade deficit with the Chinese.

China Success

China is doing very well in the hi-tech industry, now having the status as a “mass producer of hi-tech products,” such as semi-conductors and solar panels. As well it is doing well in garment and textile industries, maintaining its reputation for being top in low-cost high value markets. At the end of the day China needs to continue to “maintain competitiveness in the global economy [through] low-cost manufacturing.” But if prices start to go up, then what will start happening is that companies will start looking elsewhere like Vietnam.

Indeed, just this last year China started constructing high-speed rail around the world, and is now “home to the world’s fastest train,” and it looks like Brazil is going to use Chinese firms to plan their high-speed rail project. But perhaps some of China’s success will come at the expense of other countries. Brazil and India are “concerned” China will “flood their markets with cheap goods.”

BRIC Cohesion?

Even though the four (now five) countries form the BRIC, it seems that in general, experts feel that the acronym alone is insufficient to give them a unified presence “on the global stage.” It is going to take much more time and a “wait-and-see” approach will have to be taken vis-à-vis G20 and other countries collaboration. While the BRIC are lessening their need to work with developed economies, globally they still have to collaborate with the “major industrialized nations.”

So the BRIC (or BRICS) do definitely have much to offer, but they need to work on compromising so that they can become a more cohesive unit and thus a force to be reckoned with vis-à-vis reforming the global financial system.

Earth Hour Good for Japanese Morale

Earth Hour took place on 26 March between 8 30 and 9 30 pm.  It is a time when people around the globe turn off their lights and make a “commitment to actions that go beyond the hour.”  According to the Earth Hour website, this year “our thoughts are with the people of Japan during this incredibly challenging and sad time for their country.”

Origins of Earth Hour

Earth Hour first emerged in Australia in 2007 as a way of conserving the world’s energy and natural resources which are depleting way too quickly.  This was a great first step but was also then leading to a climate change and is today a global event which is “being observed in more than 134 countries and territories,” coordinated by the World Wide Fund.

Delhi Saves 296 MW Power

Earth Hour was most effective in India.  During the hour more than a thousand individuals came together to dance away to loud rock numbers from the Indian band Euphoria, in complete darkness!  Lights weren’t needed for the energy to spike.  No one stayed home.  From toddlers to seniors, everyone joined in total cohesion to save electricity during the 8 30 to 9 30 Earth Hour.  According to DU student  Sharmishtha Chatterjee, “…it was very wise on WWF’s part to organize an event like this, where everyone was invited,” since otherwise many people would have just stayed home alone and ignored the event – and the idea – and not turned off their electricity.  Indeed, according to Sheila Dixit Delhi Chief Minister, “the city plunged in darkness for a brighter tomorrow….[with the] hope that Earth Hour sensitizes each one of us for making the shift to a better lifestyle.”

There’s Always One Party Pooper

Unfortunately at any party there’s usually one party pooper.  At this celebration it was clearly Toronto.  Millions of people from 134 countries — from Delhi, India to Heidelberg, Germany — switched off their lights and televisions for the fifth annual Earth Hour on Saturday night to show their support for action on climate change, but Toronto witnessed a measly 5 per cent power drop during the event, marking just 50 percent of the country’s achievements last year.  Nonetheless, it’s still seen as a “success” in the country.

India’s Booming Economy Doesn’t Reflect Its Women

While the economy in India goes from strength to strength with the trend set to continue, it seems the women of the country feel there is little to celebrate.  Indian finance officials predicted that if the economy “sustains a nine per cent GDP growth” in the next decade, the economy is likely to reach a staggering $ six trillion.  If this is the case, why do the women feel there is nothing to celebrate alongside their sisters on International Women’s Day on March 8?  Most are unaware of the date and its significance (which began in 1910 at a conference to change women’s difficult work conditions, leading to the UN declaration in 1977 of this date being the International Day for Women’s Rights and International Peace).  Indeed, one Indian school teacher commented, “International Women’s Day makes no difference to me. I go to school, and I get back home to do my chores.”  For her – like many other women in India – no matter how the country is advancing – at the end of the day she still needs to work her fingers to the bone to keep everything on track. 

Women’s Plight “Dismal”

It seems there is little for the women of India to celebrate.  Content writer at PlaNET Surf Smriti K thus pointed out that “it makes no sense to celebrate such days when there is no real difference to the plight of ordinary women.”  This seems like such a shame since they should be benefiting from how the Indian economy is set to grow to nearly $1.8 trillion in the next two or three years.  If this really happens then it will result in the country becoming a world power, but if the women are still suffering and their plight is really so dismal, then the extreme disparity in the country cannot be good.
Perhaps if the women could find ways to celebrate International Women’s Day and to be more assertive and fight for more rights then they too could benefit from the country’s successfully developing economy.  When that happens, the whole country can start to enjoy the fruits of their labor.

Global Sources Says That Rising Chinese Prices Drive Away Buyers

chinese-pricesGlobal Sources conducted a survey of 385 business buyers. According to the survey, a majority of purchasers pay prices that are too high for Chinese products. Chinese exports are losing their competitive edge against lower-cost countries, especially for low-price goods.

Sixty-eight percent of those answering the survey said that the yuan’s appreciation has changed their sourcing strategy regarding Chinese goods.

One-third of respondents predict that the yuan to will rise to 6.5 to the U.S. dollar during the next half year.

In response to the rising yuan, 54 percent said that they will import from less expensive countries such as Vietnam and India. However, buyers will still purchase from China for goods that have short delivery schedules or detailed specifications.

Global Sources’ President of Corporate Affairs, Craig Pepples said that “Given the changing price point of China products, China exporters must work harder to market themselves and justify higher prices in terms of service, product quality or production volume.”

GAIL Is Looking To Invest In US Shale Gas Businesses

Shale-gasIndian state-owned gas marketer GAIL? Ltd is searching to acquire shale gas companies in the US. Gail is prepared to invest approximately $400-500 million. The company has publicized a request for proposals (RFP) from bankers who are able to help it identify targets and to close a deal. The RFP was publicized last month.

GAIL is also prepared to partner with other oil and gas companies for its international shale gas aspirations.

“Acquiring a shale gas asset company in the US would give the company the opportunity and the competence to bid for shale gas assets in India, as and when they come up for auctions,” according to Edelwiess Securities analyst, Niraj Mansingka.