Bottomline Edition 1, Oct 2013

TABLE OF CONTENTS
1. Brakes on BRICS 2. Academia Speaks Ailing Economy Wailing India: Lack of Diagnostics Impact Investing Putting a human face to finance 3. Industry Speaks GST: Game changer or name changer FDIC Interview Birds: Five Good Money Habits 4. Students Speak The Slowdown of BRICS Islamic Banking: A catalyst to financial inclusion in India QE3: The idea that shook QE2 Credit Unwinding and EM Growth 5. Financial Technology Treasury Management in Banks: A technological perspective Algorithmic Trading interview 6. Sector Talks: Indian Retail Sector 7. Mergers and Acquisitions Microsoft Nokia Deals Vodafone Verizon Deal 8. Personality Profile Patrick Dlamini Xi Jinping 9. News Round Up 2 5 6 9 12 13 16 18 20 21 24 26 28 30 31 34 36 41 44 45 47 48 49 50
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Team Bottomline: Chief Editors
Romil Johri Shashank Shekhar Dear Readers
TEAM NETWORTH
Senior Coordinators
Abhishek Agarwal Gaurav Pandey Gautam Sridharan Lavanya Pandey Mehak Chopra Nikhil Jalan Pratik Jaipuriar Shobhit Agarwal
We are pleased to present to you the first edition of BottomLine, the bi-annual finance Delete text and place phot magazine of Indian Institute of Management, Bangalore brought to you by Networth The Finance Club of IIMB. The endeavor of this magazine is to bring to you insightful views in the field of finance and economics from some of the best academicians, industry practitioners and students. We also bring to you a round-up of economic news, M&A activity and sector research. The cover story for this edition of the magazine was chosen as Brakes on BRICs which CAPTION YOUR PHOTO HERE represents the slowdown of growth in the emerging economies of Brazil, Russia, India and China. While these nations have been in the news ever since the US Fed announced its decision to scale down its unconventional o here. monetary policy of QE, we try to look beyond just this factor and get to the bottom-line of the factors inhibiting growth in these countries. We would like to thank Prof. Charan Singh, Prof. Utkarsh Majmudar, Mr. Abhishek A. Rastogi, Mr. Dhananjay Sahasrabudhe, Ms. Radha Valisetty and Kotak Mahindra Bank for contributing to this edition of the magazine. We would also like to thank the students for the amazing response we received for the student articles section. We would love to hear from you about our magazine. Feel free to send in your feedback, comments and suggestions to the following email id: Networth@iimb.ernet.in Editorial Team BottomLine
Editorial Team
Akhil Mittal Akshat Kumar Sinha Devesh Jhalani Jyoti Nathany Rahul Ghosh Shomrita Pal Shubham Agarwal [Type text] 32
Networth - The Finance Club of IIMB | networth@iimb.ernet.in 1
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EDITORIAL
BRAKES ON BRICS The tremendous growth witnessed by the emerging economies in the first decade of the millennium seems like a thing of the past. Plagued by domestic issues and slowdown in global demand these economies are beginning to stumble. When Jim ONeill of the Goldman Sachs coined the term BRIC in 2001 while referring to the tremendous growth potential of these economies, global investors flocked to these countries. And these countries didnt disappoint, at least for the first decade of the 21st century. However, the pace of growth has slowed down significantly in these countries. While part of it is due to cyclical adjustments, quite a bit of the blame can be apportioned to domestic issues in these countries. The rise Brazil, Russia, China and India (the so called BRIC nations) experienced a period of significant growth at the turn of the new millennium. Together they contributed more than 40% to the worldwide GDP growth at the turn of the first decade as the developed economies struggled to attain even 2-3% growth rates. While China was the clear leader with consistent growth rates in double digits, India grew at about 8-10%, Brazil and Russia grew at 2-6% and 5-8% respectively. In PPP terms the share of GDP of these four countries in the world GDP has grown from about 21% in 2000 to nearly 30% today. The growth projections for these countries highlighted their increasing importance in the global economic landscape.
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However the projections for the second decade did not fructify and the fall from grace of these countries (so far) has been as fast, if not faster, as their rise to prominence. In an interview earlier this year, Jim ONeill mentioned that CAPTION YOUR PHOTO HERE the only country in the BRIC group that remains worthy of being in there is China.
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GDP growth has fallen across the board, and pretty precipitously in the case Russia and Brazil. While part of it can be attributed to cyclical adjustments that were inevitable, a lot of it is due to the fiscal and/or monetary policy issues that were not addressed by these countries.
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EDITORIAL
Brazils growth was driven by global commodity demand which kept spurring Brazilian iron ore and agricultural exports. The graph below shows the change in the index of commodity prices (CRY Commodity Index) and Brazilian GDP growth. It depicts how Brazils growth follows commodity price movements. The lack of GDP expenditure on investments (just 18% of GDP for the last year) has also been a major impediment in sustaining the high growth rates.
On the monetary front, Brazil has not been able to control its inflation which has averaged nearly 6% for the last 5 years. A part of the problem was also the constant inflow of foreign capital (chasing higher yields) which led the Brazilian Real to appreciate to uncompetitive levels. Russias growth was primarily driven by commodity prices and world demand, the slump in global demand due to the US financial crisis followed by the Eurozone crisis and the slowdown in China led to collapse of growth in Russia. GDP growth has fallen from a high of 8.5% in 2007 to about 3%.
Indias growth has been stifled due to lack of reforms and policymaking that India badly needed but was ignored during a time when it could have CAPTION YOUR PHOTO HERE Crucial reforms on land implemented these easily. acquisition, tax related issues have been in limbo for way too long to infuse confidence amongst global investors. A bloated deficit has made India vulnerable to external capital flows. After having o here. seen a year of double digit GDP growth, the only economic indicator close to double digits in India right now is inflation. Indias central bank missed a trick when it tried to fight the currency depreciation at the expense of domestic monetary policy.
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EDITORIAL
Chinas growth had been due to over-reliance on state driven investment and an export sector propped up by a managed currency. The ratio of Investment to GDP in China is close to 47% and has been consistently above 40% for the last 10 years. Although China can still boast of 7.5% growth rates, the sustainability of its growth depends on rebalancing from investment based to domestic consumption based growth. The way forward Whether these nations achieve the growth which they saw in the first decade of the century is hard to predict. But to recover to more sustainable levels of growth these countries need to bring about more stability at the macroeconomic level. They need to ensure they have greater control on inflation and that high inflation levels do not become an impediment for growth. There needs to be greater fiscal prudence and political stability to ensure the necessary conditions for growth are made available. Most importantly, the economies need to move away from investment driven model to domestic consumption driven model of growth. This would not only allow for better distribution of the benefits of growth, it will also reduce dependence on foreign demand and capital flows. The BRICs have certainly slowed down along with the other emerging economies. But the potential GDP growth rates of these nations have not gone down and if the macro and fiscal scene is made conducive for growth they can still return to the growth rates which were seen consistently in the last decade.
China Only BRIC Country Currently Worthy of the Title ONeill (http://blogs.wsj.com/moneybeat/2013/08/23/chinaonly-bric-country-currently-worthy-of-the-title-oneill/) Delete text and place phot Data Source: Bloomberg
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Ailing Economy
Wailing India: lack of Diagnostics, Prof. Charan Singh
Impact Investing
Putting a human face to finance, Prof. Utkarsh Majmudar
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Ailing Economy Wailing India: Lack of Diagnostics CHARAN SINGH. The Indian economy has been passing through an extremely critical situation which has been acknowledged by the PM and the RBI last week. The economy is suffering not only from the global spillovers but also from domestic ailments for quite some time now. This is reflected not only in the lower growth rate of 4.4 percent in the first quarter of 2013-14 but also in the spluttering exchange rate. The global spill overs are expected to continue, probably worsen, once the unwinding of the unconventional monetary policy actually begins in the US. The scenario is expected to be challenging amid the ever widening current account deficit (CAD), worsening fiscal targets, persistence of high inflation, slowing growth, deteriorating asset quality of banks and depleting levels of confidence of the markets in governance. These challenges are not easy to face for any country. But first, we must have the correct diagnostics and only then can we strategize to stage a respectable recovery. The first signs of deterioration in the economy, if analyzed on a quarterly basis in a dis-aggregated manner, began in 2009-10, with CAD of more than 3 percent of GDP in three quarters. In 2010-11, manufacturing had succumbed to lower growth and by 2011-12, services and construction.
DR. CHARAN SINGH
Prof. Charan Singh is the RBI Chair Professor at IIM Bangalore. His research areas include Monetary & Fiscal Policies and Issues; Debt Management; International Reserves; Financial Markets; Banking; Infrastructure.
Thus the country has been in ICU, in the economic sense, for more than a year with a multi-organ failure, or complicated terms.
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The index of industrial production has been stagnating at very low levels since the last two years. The pervasiveness of the slowdown is reflected in a wide range of industries. The growth rate of manufacturing of 2.7 percent and 1.0 percent in last two years compared to 11.3 in 2009-10 seems appalling. Some industries like motor vehicles have registered contraction. The services sector has recorded the lowest growth in 11 years at 6.8 percent during 2012-13. The growth rates in construction, tourist arrivals, and cargo traffic have declined over the last two years. And in the absence of a credible measure of real interest rate, national savings and investments have also been declining. To curtail the CAD, the government has imposed import duty as well as other measures on gold. This, as would be expected, has resulted, according to press reports, in higher smuggling of gold. However, despite the efforts of the government and stringent measures by the Reserve Bank of India (RBI), CAD during April to June 2013 continues to be high. On the other hand, to contain the GFD, oil subsidy has been reduced with a monthly reset. But the additional expenditure on Food Security Bill (FSB) would probably compensate the reduction in oil subsidy and GFD would continue to be high. In such a depressing situation, recovery on account of a good monsoon can neither be immediate nor substantial. After all, agriculture only accounts for about 13.7 percent of the total GDP. And, in view of the FSB, the assessment of
agriculture production and food grain requirementDelete wouldtext also change. The impact of and place phot Land Acquisition Bill, on both industry and agriculture, has yet to be assessed. To stage a respectable recovery, some concrete steps would be required. First, there is a need to reduce the twin deficits. The best antidote against these deficits is high-growth. To achieve high growth, the government has to identify sectors which have potential growth and initiate targeted measures. In a weak economy, revenue led fiscal correction is rather difficult. Expenditure compression may also YOUR PHOTO HERE beCAPTION difficult unless there is a sharp reduction in capital outlay or substantial increase in government borrowings. A reduction in capital expenditure would imply lower accumulation of assets and increased borrowings leading to o here. higher interest payments, both burdensome in an inter-generational sense. Thus, the complex situation demands a careful analysis. Exchange rates play an important role in exports and imports and could an over-valued currency could also be a cause of high CAD. In determination of exchange rates, inflation differential between two countries is a crucial factor. As inflation has been high in India as compared with the US, exchange rate should be permitted to adjust according to market forces. China prefers to have a highly depreciated currency while, it seems, India prefers to have an overvalued currency. China, prefers the beggar-thy-neighbor policy to grab larger share of global exports while India, it seems, prefers,
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enrich-thy-neighbor policy, by insisting on maintaining over-valued currency, losing its share in global exports. As a citizen, it is clear that the Ministry of Finance (MOF), Government of India and the Reserve Bank of India (RBI) are aware of the grim situation. But what is not clear is whether the RBI and the MOF have a common view on the diagnostics of the problem? Is it high interest rates, policy paralysis, governance deficit or simple uncertainty that is the cause of lack of demand and slow growth? There are heaps of analysis in the media but critical investment decisions cannot be based on scattered media reports and individual analysis. In the absence of credible and common diagnose, at least in the perception of common public, how would a strategic recovery path emerge that inspires confidence in the course of treatment? It is this lack of direction and forward guidance that probably is confusing the market. To move ahead, and beyond the blame games, and to navigate the economy through such a turbulent period, it would be helpful for the country if a committee of economic experts, be constituted and mandated to arrive at a consensual approach forward, similar to the National Advisory Council or a panel of doctors treating multi-organ failure. That is the need of the hour, irrespective of ideologies, and a common Indian, even if illiterate, is neither new nor afraid of facing challenges. .
But responding to uncertainty, and confusion, off course is a Delete different story text and placeand phot legend of Ashwathama, is an apt illustration.
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IMPACT INVESTING PUTTING A HUMANE FACE TO FINANCE*

UTKARSH MAJMUDAR Consider the facts. Two billion people on the planet do not have access to safe water, heath care, or financial services. A billion people do not have access to electricity. Two hundred and fifty million children do not have access to education or childhood immunization. The problems are immense and need speedy solutions. With public funds being limited the need for private investment in public areas is acutely felt. Impact investing expands the role for private enterprise in addressing the worlds most pressing social problems. Impact investing is defined by The Global Impact Investing Network (GIIN) as: investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return. Impact investing also goes by several other names socially responsible investing, social investing, mission driven investing, responsible investing etc. The social investing ecology is best described in Figure 1. Although, traditionally foundations, development financial institutions and high net worth individuals have contributed recent studies indicate that other investors are getting attracted to the potential of impact investment.
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By Utkarsh Majmudar. The author is an educator, trainer and a consultant. His interest areas include corporate finance, behavioral finance and corporate social responsibility. He can be reached at: utkarsh.majmudar@gmail.com References:
About Impact investing, GIIN, accessed on October 3, 2013, http://www.thegiin.org/cgibin/iowa/resources/about/index. html Social impact bonds, http://www.socialfinance.org.uk/sites/default/files/SIB_repo rt_web.pdf Accessed October 3, 2013. World Economic Forum, From the Margins to the Mainstream Assessment of the Impact Investment Sector and Opportunities to Engage Mainstream Investors http://www.weforum.org/news/new-report-bringing impactinvesting-margins-mainstream
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Impact investors also create new financial instruments such as social impact bonds - a contract with the public sector in which a commitment is made to pay for improved social outcomes that result in public sector savingsThe growth, and visibility, of the impact investment industry has been remarkable. However, significant challenges remain. It has generally been pointed out that the lack of track record of successful investments is a main concern and that too few established players are active in impact investing. One of the key challenges is a measurement problem. As an example, if the impact of an investment is creation of three jobs then the outcome is increased wages to the workers, higher taxes to the state and reduced government subsidies. On the other hand, if one of the workers would have found a job without the investment then the benefit would have been a net of two persons. Hence it is not easy to track impact over time. Measurement issues are being addressed by three distinct but complementary tools: IRIS, PULSE, and GIIRS. Another area of challenge is the much stricter fiduciary obligations of institutional investors. Lack of successful track record and shortage of scalable and attractive investment opportunities create barriers to impact investing. Layering of financial instruments (e.g. grants and PRIs) also makes it harder to precisely define impact of investing. Governance is an area of significant concern. Profiting from the poor is a grey area and significant attention needs to be paid towards creating frameworks that build an independent
third party monitoring mechanism.

Other roadblocks include investor skepticism about achieving both financial returns and creating social impact together; imperfect information regarding investment opportunity set; limited exit strategies due to insufficiently developed and illiquid markets. Despite the challenges, impact investing is set to soar. Industry research suggests that approximately 2,200 impact investments worth $4.4 billion were made in 2011.This is almost doubling of investments from 2010. In India, CAPTION YOUR PHOTO HERE the impetus is likely to come from the new Companies Bill (2012) that mandates 2% investment in CSR activities subject to certain criteria. Growth in impact investing is likely to come from four sources: o here.
1. Massive pent-up demand at the bottom of the pyramid a large number of consumers and producers in this segment will join the market 2. Driving green growth investment in renewables are forecast to grow at a steep rate 3. Reconfiguration of the welfare state fundamental shifts in the ways in which we approach public good output will create opportunities for the private sector 4. Emerging lifestyles of health and sustainability segment at the top of the pyramid this is already a fast and growing segment
Despite several roadblocks impact investing is likely to grow and become part of the mainstream finance.
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Case Study Vaatsalya Healthcare The poor in tier two and three cities in India have limited access to healthcare services, as primary and secondary healthcare infrastructure is inadequate and tertiary healthcare infrastructure is largely concentrated in metropolitan areas or larger cities.
Delete text and place Vaatsalya addresses this gap in phot primary and secondary healthcare infrastructure by offering high quality, no-frills, affordable primary and secondary healthcare services. Vaatsalya currently operates across 17 tier-two and -three cities in South India, such as Mysore, Shimoga, and Ongole. (www.vaatsalya.com)
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Figure 1 Impact Investing eco-system3
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GST: Game changer or name changer!!!

ABHISHEK A. RASTOGI
As India, an aspiring superpower, enters into the general election environment, the entire World bracing a slowdown or dealing with a fiscal cliff is again peering at the reforms bubbling in Indias cauldron. To keep the pot boiling, the Government realized that the issues gyrating around fiscal bloat, fragile investments, obdurate prices and reforms need greater deliberation so that the economy can hop back to a decent growth trajectory by 2014. The Governments strategy can be discerned by various initiatives with respect to Companies Act, Goods and Services Tax (GST) and Direct Tax Code (DTC). While the Companies Act has received the Presidential assent, the DTC will be finalized based on the best international practices so that the robust draft of the Code can be soon introduced. Further, in an attempt to refurbish the horribly antiquated indirect tax system, the Government has taken initiatives for implementation of the GST which will always be considered a transformational change in the history of indirect taxes in India. It is an acknowledged fact that the services sector has been a vital force steadily driving growth in the Indian economy which has navigated the turbulent years of the recent global economic crisis.
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ABHISHEK A. RASTOGI Abhishek is an Associate Director with Pricewaterhouse Coopers. He has authored eight books on the GST and service tax published by Taxmann Publications and Lexis Nexis.
Various measures have been taken on the service tax front in the last eighteen months including introduction of negative list and place of provision of services rules.
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The fundamental reason for adopting the comprehensive basis of taxation framework is to circumvent the current patchwork of indirect taxes that suffer from infirmities, mainly in the form of exemptions and multiple rates. In addressing this issue, the new service tax framework has opened a window of opportunities as well as a Pandoras Box of threats for the countrys proletarian class. Thus, in the negative list regime, it is imperative to examine the new concept of service, details of the negative list, details of exemptions mentioned in the mega exemption notification, and broad contours of the point of taxation and place of provision of services. These significant legislative changes ensure that the current model is closer to the GST regime and that the implementation of the GST would not be from scratch. It is also important to probe into the diverse impacts that variegated sectors may potentially have. To encourage voluntary compliance and increase service tax collection, Voluntary Compliance Encouragement Scheme has been introduced in 2013 for providing one time amnesty to the stop filers, non-filers, nonregistrants or service providers if they have not disclosed true liability in the returns filed by them during the period from October 2007 to December 2012. The scheme provides amnesty by way of complete waiver of interest/penalty and immunity from prosecution.
The fundamental reason for adopting the GST framework in India is and to not only get rid of the Delete text place phot current patchwork of indirect taxes that are partial and suffer from infirmities, mainly exemptions and multiple rates but also improve tax compliance. The spread of Value added tax (also called the Goods and Service Tax) in different countries has been one of the most important developments in taxation over the last six decades. Owing to its capacity to raise revenue in the most transparent and neutral manner, the GST has been adopted by a host of countries. CAPTION YOUR PHOTO HERE This transaction model has already spread to more than 150 countries and attracts more countries to be on the same platform. With the increase of international trade in the arena of services, the GST o has become a preferred here. international standard. So much so that all the OECD countries except the USA follow the VAT which makes international trade a much easier reality. India too has been moving slowly and steadily towards the GST regime. The exercise began a long back and was phased out in steps such as implementation of VAT, rationalisation of excise duty rates, introduction of service tax, integration between excise duty and service tax, introduction of the negative list of services, implementation of point of taxation and formulation of place of provision of services rules.
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The Centre and the States are now embarked on the design and implementation of a uniform GST across the country. The unified tax will take the form of a Dual GST, to be levied concurrently by both the levels of government. The unified tax will comprise of a Central GST and a State GST and both the Centre and the States will legislate, levy and administer the Central GST and State GST respectively. It is important to stress on the key words legislate, levy and administer as these words clearly show that both Centre and States will legislate the respective GST Acts and that both Centre and States will have power to administer the taxes. It is pertinent to mention that under the dual GST system, the same taxable base will be subject to the Central GST and State GST. The proposed tax system will subsume a variety of Central and State levies such as Central Excise Duty, Service Tax and VAT, thereby simplifying the complicated tax structure and reducing compliance costs. For tackling the complicated issues related to interstate transactions, an innovative concept of IGST (Integrated Goods and Services Tax) is also under consideration. The Parliamentary Standing Committee submitted its report on August 7, 2013 with respect to the Constitutional amendments which would mark the beginning towards introduction of the GST.
Some of the important developments revolve Delete text andaspects: place phot around the following key Establishment of a GST Council Design of the GST Compensation mechanism for States IGST model to tackle inter-state supplies Flexibility for States to retain state autonomy SGT dispute settlement authority Harmonised tax structure
CAPTION YOUR PHOTO HEREParliamentary Standing The report of the Committee headed by Yashwant Sinha will act as a significant stride towards implementation of the much awaited GST. Although lot of changes have already been introduced in the o here. current service tax regime, there are still disputes over various activities whether such activities would qualify as goods or services. There have also been disputes on the constitutional validity of taxing various activities. The litigation is still pending in various cases where there are disputes as to who is the service provider and who is the service recipient. With the recent changes in the indirect tax regime in a country of Indias magnitude, a deep deliberation and analysis on the impact of the new service tax structure on various sectors is certainly the need of the hour. These interesting service tax issues will be discussed in the subsequent articles.
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FDIC INTERVIEW WITH RADHA VALISETTY RADHA VALISETTY Radha Valisetty works as a Business and Systems analyst at the FDIC, Govt. of United States FDIC, or the Federal Deposit Insurance Corporation is a US Government agency providing deposit insurance in member banks
What is your opinion about the health of the US banking system at present and the lending practices followed by banks? The health of the banking industry in the US is improving slowly, but the improvement can be partially attributed to the natural ebbs and flows of the industry. The lending practices have done very little to improve the condition of the consumer. . With so much of analysis going on regarding the tapering of assets purchases by the Fed, how equipped are banks to handle an increase in the fed rate? The Federal Reserve announced that it will make no changes in its asset purchase program suggests that U.S. bank liquidity will remain near record high, as securities held on the Feds balance sheet continue to grow. When a tapering of quantitative easing (QE) does eventually begin, the impact of reduced bond buying will have little effect on banks lending capacity and funding costs in the near term.
Are the US banks in a position to cope with the stringent capital requirements as mandated by Basel III norms? Implementation date for Basel iii for US banks has been pushed to Jan 1, 2015. Once implemented these rules will have a broad impact on the capital planning and investment strategy of US banks.
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Do you feel that the requirement for higher capital is having an adverse impact on banks lending and subsequent economic activity? The goal for mandating stricter capital reserve standards is to create a stronger, more resilient industry better able to withstand environments of economic stress in the future, so even if the lending standards make capital less available it is a smaller pain in the near term to avert bigger future catastrophes.
risks. Executives at the American International Group were found to have been blind to its $79 billion exposure to credit-default swaps. The banks Delete text and place phot hid their excessive leverage using derivatives, offbalance-sheet entities and other devices. Law suits against bank officers are one of the many means for recovering the costs of closing banks where fraud and negligence occurred to protect the deposit insurance fund. What are the new challenges and initiatives from FDIC under the Dodd Frank Act for assessment of risk in the largest, systemically important financial institutions? The implementation CAPTION YOUR PHOTO and HERE enforcement of DFA is very complicated. FDIC has successfully made the big banks identify dissolution plans and recorded them. The biggest challenge would be to see how realistic these plans are and if the FDIC can handle o here. failures of such institutions with minimal impact to the depositors. FDIC recently decided not to provide insurance for cash held outside the country. What do you think about it? According to the chairman this rule protects the Deposit Insurance Fund while at the same time recognizing both the FDICs commitment to maintaining financial stability through the prompt payment of deposit insurance.
With so many banks failing after the 2008 crisis, what challenges does it pose for you? How has risk assessment changed post 2008? Prior to 2008 the regulators trusted the risk management strategies and practices of the banks themselves, whereas after the financial crisis the regulators have done some independent assessment of the reasons for the crisis and are trying to mitigate similar risks as much as possible in addition to trying to bring more transparency to the risk management to understand better what policies worked and why, and conversely why some policies failed. FDIC had recently been filing a considerably large number of law suits against the leaders of the failed banks, how, according to you, did these leaders lead the banks to doom? In the 2008 financial crisis bank executives paid little attention if any to mortgage-related
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GOOD MONEY HABITS CAN CHANGE YOUR LIFE

BIRDS Five Good Money Habits that will help you manage your money better This article created by collating the views of the Senior Leadership Team at Kotak Mahindra Bank talks about the money we spend. The acronym BIRDS signifies the five key investor money habits B stands for Budget; it always pays to have your budget in place I stands for manage your Investments well R is for plan for your Retirement D stands for manage your Debt S stands for Secure your family These are the five key mantras- 5 Good Money Habits that will help you manage your money better.
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Managing your Investments is about setting right and realistic goals. So the first point is to set the right goals and the second is to avoid investing into complex instruments. You must decide an investment allocation based on your risk appetite and stick to it, irrespective of what the market dictates. The rule of 100: A formula for Investment Allocation Deduct your age from 100, and that would be your ratio between debt and equity. The thumb rule is that the younger you are, the longer you have to plan your investments and therefore the higher should be you equity allocation. Debt is supposed to give you steady returns in the long run but equity can give higher returns. So if you are 25 years old, and you put 75% of your money in equity, it is expected to grow well.
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You can always become rich either by making money or saving money. Avoiding impulsive purchases with a reasonable, realistic Budget is the first step to achieving that dream. To keep track of your budget, there are lots of tools available, like Money Manager, money management tools etc. Also, ensure that you use whatever loyalty points you earn on various cards and all discounts available from service providers.
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Coming back to risk appetite, if you have aggressive risk appetite, then you would invest more in equity: in which case even 80% investment in equity is good. But if you are a conservative type, even 10-20% is high. All these things put together, it's a good idea to have an investment advisor. The earlier you start the better!
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If you plan for retirement, plan for long-term goals. Retirement is one of the biggest goals. The idea is to invest regularly, save regularly here instruments like recurring deposits, systematic investment plans and insurance come in handy. The rule of 72: A formula to double your money This rule of 72 is not perfect, but it points a person in the right direction. Say, you want to double your money in 10 years. Then, your rate of investment should be 72 divided by 10, that is, 7.2 years. Similarly, if you are getting 10% returns today, it will take you about 7.2 years to double your money. One should not try to time the markets, they should continue with regular investments, having allocations and sticking to it. The common man should take note of the power of compounding. Einstein once said that the biggest force on earth is that of compounding. That's how `1 lakh turns into `7.5 lakh in 20 years; all because of compounding, where your principle earns interest and the interest too earns interest in turn.
You spend money and then pay only the 5% minimum that is required on your card payment. This is debt. Rates on credit cards Delete and placewhile phot a typical vary between 24 text and 36%, home loan would cost you about 10 to 11.5%. Delete place phot Cards add up debttext forand wrong reasons, unlike a home loan which is for a good reason. So control your buying impulses, control the card expenditure and don't stack up debt on cards. Also, repay the debt as early as you can. Because compounding works in reverse too. The best thing to do is to repay your debt before doing anything else.
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CAPTION YOUR PHOTO HERE It's extremely important to plan for any eventuality - for the Security of your Family! CAPTION YOUR PHOTO HERE For instance, when you have a house in a corporative society it is important to have a nominee or the house o should here. be in two persons' name. Even investments fixed deposits, bank accounts etc. should o have either nominations or here. joint holders, because if something were to go wrong, the process of getting that money becomes much easier for the family. Second, everyone should have a will, so that your property (whatever you have; you needn't be rich) can be amicably divided. Third, insurance: you must have life and medical insurance. Also, if you have debt, make sure your insurance policy will pay off your debt. To leave behind debt to the family would be very, very cruel. Any insurance policy you take should protect at least 60-70% of your current income, because protecting the family if something unforeseen happens is an extremely important part of Good Money Habits.
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Debt can be a killer!Let us look at credit cards.
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The slowdown of BRICS

BY BHANUPRIYA GUPTA
This article has been contributed by Bhanupriya Gupta, a PGDM student at Indian Institute of Management Raipur.
INTRODUCTION BRIC(S) was one such idea, when Jim ONeil, coined the term in 2001. These five emerging economies (Brazil, Russia, India, China and South Africa) today account for roughly 33% of the worlds population and 25% of GDP. But that confidence seems to be dwindling now with the BRICS economies facing challenges like slowing growth, falling markets, reducing investments which have put brakes on their growth. WHY BRICS LOOKS UNATTRACTIVE NOW BRICS along with other emerging economies were dependent on foreign investments, but they are feeling the global financial heat with investors fleeing away from these markets. The economic growth in the BRICS countries has slowed down. The MSCI BRIC Index had tumbled about 17% so far this year and about 37% from its 2007 peak. According to EPFR, between 2001 and 2012, BRICS attracted an inflow of $ 184.1 billion in the capital markets against an outflow of $ 13.4 billion since January this year. HSBC expects the GDP of BRICS nations to expand at 2.4% for Brazil, 2.5% for Russia, 5.1% for India and about 7.4% for China.
Even the research by CME group also shows how the GDP growth for these economies is slowing year over year.Factors responsible for this slowdown are: Global economic slowdown has led to the recent drop in investments. Eurozone recession along with volatility in global markets and exchange rates due to murmurings about the tapering of financial stimulus by US Fed has resulted in shifting of investors sentiments from the uncertain markets (like BRICS) towards relatively stable US market (due to strengthening dollar, record setting performance of equity market and improvements in labour market).
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BRICS nations are finding it difficult to attract investments due to factors like lack of promptness and transparency in government operations, infrastructure bottlenecks, corruption and under-development of the modern legal framework. Factors like inflation, depreciating local currencies, rising commodity prices and asset bubbles in these economies have resulted in the social and financial upheaval, further deteriorating the condition as evident from the figure below. OTHER OPTIONS Some other emerging markets like MIST and other N-11 nations look attractive. Significant investments are taking place in Mexico, Indonesia, South Korea and Turkey (MIST) due to the improved business climate, ease of doing business, extensive trade agreement networks and increasing population with growing purchasing power. Indonesia demonstrated stable growth of around 6%, surpassing even India, and attracted a total of $34.1bn investments in 2012. Similarly, South Korea had maximum FDI inflow growth among the four MIST nations as depicted below:
Today it is BRICS, tomorrow it could be MIST and day after it could other Delete text be andany place photdestination. The bottom-line is that investors look forward to generate value for their investments. Any nation can assure this with right policy and legal framework, by improving ease of doing business, stronger infrastructures, extensive FTA networks and such other initiatives to attract investments and propel ahead on the path of growth.
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http://www.efinancialnews.com/story/2 Delete text and place phot 013-07-17/cracks-appear-in brics?ea9c8a2de0ee111045601ab04d6 73622 Accessed on 28.08.2013 http://blogs.ft.com/beyondbrics/2013/01/22/indonesia-fdi-rollson/#ixzz2d6SyOkCZ Accessed on 28.08.2013
http://www.chinadaily.com.cn/cndy/201 3-07/29/content_16844825.htm Accessed on 27.08.2013 CAPTION YOUR PHOTO HERE https://ktwop.wordpress.com/2013/08/2 0/brics-is-losing-bis-as-the-financialcrisis-bites/ Accessed on 29.08.2013
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http://money.cnn.com/2013/08/04/inves ting/bric-markets/index.html Accessed on 28.08.2013 http://growingcapacity.blogspot.in/201 3/05/indonesias-gdp-and-fdi-successstory.html Accessed on 28.08.2013 http://www.businessweek.com/articles/ 2013-03-21/bric-investors-lose-theirtaste-for-stocks Accessed on 30.08.2013
REFERENCES:
The Rise of BRICS FDI and Africa, UNCTAD Report (2013) MIST: The next big thing or just hot air?, Grail Research Report (2012) BRIC Country Update: Slowing growth in the face of internal and external challenges, CME Report (2012) How Solid are the BRICS?, Goldman Sachs Report (2005) [Type text] 32
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ISLAMIC BANKING: A CATALYST TO FINANCIAL INCLUSION IN INDIA? BY Y. VENKATA ACHYUTH KUMAR The non-availability of interest-free banking products results in some Indians, including those in economically disadvantaged strata of society, not being able to access banking products and services due to reasons of faith.
Raghuram Rajan (A
This article has been contributed by Y. Venkata nd Achyuth Kumar, a 2 year PGDM student at Indian Institute of Management Raipur.
This was the view expressed by Hundred Small Steps) Raghuram Rajan in A Hundred Small Steps, which was the report of his committee on financial sector reforms, published in 2008. Financial inclusion came into lime light in India, after the recommendations of Khan Commission (2004) were incorporated into the mid-review of RBIs 2005-06 policy. In simple words, financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. In A Hundred Small Steps, the committee felt that provision of interestfree banking is the most important area in the ambit of financial infrastructure for financial inclusion. The main purpose of inclusion is to expand the coverage of the financial system in the country, which is the key objective for the emerging economies. Islamic Banking, an alien concept in Indias conventional banking system, is a Sharia Law based banking system which promotes profit sharing, but prohibits the charging and paying of interest. Islamic banks are operational in 75 countries with assets touching $1.1 trillion and have grown at a rate of 15%.
These countries include non-Islamic nations like UK, USA, Germany, France, Singapore etc. These developments across the world seem promising for implementing the same in India. Recently, the RBI gave nod to Kerala government to launch financial institution following Islamic finance. Currently, India has a network of 82,000 branches of commercial banks across the country, but only 5% of villages are catered for where 70% of the population resides. Mudarabah, a kind of financing agreement, involves one party supplying the capital and the other supplying the labour, with both the lender and the borrower sharing the risk.
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This is helpful to the low income group, especially less wealthy farmers who otherwise would not be able to provide collateral. Riba, which means a ban on interest payments and collections, prevents the accumulation interest payments, when the farmer or business person becomes bankrupt. This is possible because, the Islamic banks not only share profits but also losses thereby preventing the pile-up of interest. According to Sachar Committee report, Muslims avail just 4% and 0.48% of the credit from NABARD and SIDBI respectively. And the Muslims credit deposit ratio is only 47% compared to the average of 74%. In places like Lakshadweep with 95% Muslim population, the credit deposit ratio is mere 9.3%. This reflects injustice in part of Indian Muslims to utilize their savings for economic growth. On the flip side, devising a regulatory framework satisfying both Islamic and conventional banking systems would be a challenging task for RBI. Educating the people about the new banking system would be tough, given the low awareness levels of conventional banking system. There is a serious dearth of Islamic banking experts in India who can manage the banks in the current competitive environment. Nevertheless, the interest-free solutions of Islamic Banking could restore equilibrium in Indian society by providing succour to debt ridden farmers, labourers and other marginalized groups. Hence, Islamic Banking has potential as a tool of financial inclusion.
. References:
Delete text and place phot 1. A Hundered Small Steps, Report of the Committee on Financial Sector reforms, Planning Commission, Government of India. 2. Why India need Islamic Banking thought paper, Infosys Finacle. 3. http://www.scief.es/blog/shariah-bankslook-to-farmers-2011-04-04/ 4. http://www.dnaindia.com/analysis/1877270/ standpoint-why-islamic-banking-in-india-isa-good-idea CAPTION YOUR PHOTO HERE 5. http://www.businessworld.in/news/finance/b anking/rbi-allows-non-bank-islamicfinance-firm/1040826/page-1.html 6. http://www.ethicainstitute.com/webinar/Ach o here. ieving_Financial_Inclusion_For_Indian_M uslims.pdf 7. http://www.economicinitiatives.com/Indian_ Economy/Inequality_in_Disbursement_of_ Credit_among_various_states.html
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QE TAPER THE IDEA THAT SHOOK Q2 AKSHAT SINHA It was May 22 afternoon. The environment was brimming with expectations investors, TV reporters, government officials everyone was anxious to listen to the Director of the much talked thriller, FOMC QE3, Mr. Ben Bernanke. However, when he did come out and speak, the audience all over found their dreams shattered the Dow finished the day 1.4%, lower, at 15,112 while the S&P 500 dropped 1.4% to 1,629 -the Director had announced plans of QE tapering through the FY 2013-14. But before we discuss what went wrong and why the market reacted the way it did and when the tapering would actually start, lets start with the basics What is this QE and why should I care? Well, we all must have used a photocopier, right? So QE employs exactly the same principle. Whenever the Fed wants to increase money supply and the conventional interest rate approach doesnt work (well, its already 0.1%, how much lower can you have it?), it loads papers into the tray, currency onto the glass panel, and presses copy. The number of copies depends on your requirement. In this case, it has been around 85 billion. So essentially pretending money out of thin air. Akshat Kumar Sinha is a first year student of IIM Bangalore. He has worked in the financial technology space after graduating from IIT Kharagpur
After the financial crisis in 2008 and the post crisis recession that slumped US growth, the Fed had to resort to asset purchases such as government securities, MBS etc. to ensure easy credit for industries and businesses and increase consumption. To give you a feel, the Fed has expanded its balance sheet by a whopping $2900 billion since 2009. But now, according to Mr. Bernanke, the US economy is "continuing to grow at a moderate pace" and "risk that the economy has entered a substantial downturn appears to have diminished over the past month or so".
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But if the US economy is on the uphill, then why should we be anxious? The problem is not here. It lies in the fact that this copying process often creates a vacuum of hot gases around, particular in form of hot money in super-funded industries. Given the low interest rates and stagnant economy in the USA (and Euro Zone), much of this easy credit was leaked out in the form of capital outflows to emerging countries where yields were higher. Thus most of the emerging countries, particularly India, with high FII investment and capital inflow, could weather off the economic recession in 2009-11. But the announcement has led to large scale sell-off in these markets as people fear tapering is going to happen sooner than later, and with these economies already reeling with high CAD and increasing inflation, this declaration has slumped growth trajectory and caused the markets to become bearish. The announcement was backed by recent reports showing encouraging signs for inflation and unemployment rate, and was meant to act as a forward guidance and signal, but it failed miserably in shaping expectations as it did not give a timeline for the tapering to start. This resulted in extreme hysteria in the market and no one was sure when tapering would begin. However, the Fed was quick to realize this mistake, and soon came up with the famous Evans Rule for guiding the tapering process. According to this, Fed will start to
slowdown its LSAP program once the Delete text reaches and place phot the 6.5% unemployment level below target and inflation crosses the 2% mark. With the inflation hovering around 1.7% and the unemployment rate nearing 7%, the period that followed was one that of speculation Will it happen in September, or December, or Mid 2014, or will it begin no earlier than Early 2015? The period through June and July added to this hysteria as the US economy grew at a modest rate and the unemployment rate reached 6.7% (temporarily vindicating Fed YOUR PHOTO HERE ofCAPTION its announcement). Though many started the Sep taper cry, yet a few pointed out fallacies in industry data. While the unemployment rate had reduced, employment hadnt increased it o here. was just that the labor force participation rate had declined. This created a perplex situation for the Fed People wanted to know whether Fed will continue with its tapering decision even in the backdrop of this new finding. It was argued that even the inflation levels are quite low, and a decision to slowdown might lead it to lower levels. Moreover, it was suggested that decision should be postponed until December, when we will have a better assessment of the economic momentum. The Fed played sensibly, and on Sep 18th announced that it will postpone its tapering plan until conclusive evidence about the upturn is found. While this decision has surely calmed a few nerves, but December is not far away, and only time will tell whether the taper will happen this year or not.
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Credit unwinding and EM growth BY RAHUL GHOSH Since the great recession, most of the economies around the world launched stimulus programmes to spur growth. The low interest rates and the unconventional monetary policy increased the debt to gdp ratio of these countries. Off late they have started or are planning to decrease their debt. The United States (US) Federal Reserve (Fed) has already started planning its gradual exit from the quantitative easing (QE) program. At the same time China, whose ratio of credit to gross domestic product ballooned from about 134% in 2008 to 173% at the end of 2011, is also deleveraging. This dual unwind can have severe consequences on the EM economies. It affects their capital accounts and hampers their growth prospects directly.
Rahul Ghosh is a first year student of IIM Bangalore. He has worked in the financial trading space after graduating from IIT Kharagpur
Unwinding US Quantitative Easing The Fed continued its QE program, to boost the feeble US economy. Of late, recent US economic data have started pointing towards an improving economy with unemployment rate at 5 year low. Moreover, the incremental benefits of QE are being questioned. In other words each additional dollar being pumped into the US economy is producing diminishing benefits. All of these factors combined with the greater risk in the economy [Type text] 32
caused by the drastic increase in US liabilities have caused Fed to consider a gradual exit from the QE program. This results in a base case of higher real interest rates in US and an appreciating US dollar (USD). As a result of the rising interest rate in the US, the capital that flew into the EMs in search of a higher yield will flow back into the US. This will deteriorate the capital account of the economies. Not only is this true for the already committed capital but also for any new investments that are about to enter the EMs.
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Additionally, the higher USD results in depreciation of the EM currencies. To protect the currencies the respective central banks will tighten their respective monetary policies further in order to attract foreign capital. Higher real rates could trigger a faster unwind of credit growth. This will hurt growth particularly in economies where the credit growth has been excessive (Higher interest rates make refinancing debts more difficult). Hence, the higher US interest rate will attract capital back into the US and the strengthening USD will cause the EM central banks to tighten their money supply. Both the factors will result in slowdown in the EM economies.
The deleveraging is causing a reduced demand Delete text and place phot for commodities and countries such as Chile and Brazil that are primarily commodities exporting economies are suffering. However, there are certain countries that have low export exposure to China and are net importers of fuels and hard commodities. They will stand to benefit from Chinas slowdown as commodity prices will cool off due to reduced overall demand from China. India and Turkey are among such economies. Therefore, the impact of China unwinding depends on the kind CAPTION YOUR PHOTO HERE of trade relationship a country has with China. While some countries are at a greater risk of current account degradation, some other countries are actually o here.benefitting from it through reduced commodity prices. Hence, the primary fear that the EM economies face right now is what will happen if both the factors strike simultaneously. The effect of the change in Feds stance in its monetary policy will cause flight of capital from EM economies. Moreover, those economies that followed the path of strong credit led growth and are net exporters to China seem to be at the greatest risk whereas those which contained credit expansion and are not large exporters to China will benefit on this front. References http://online.wsj.com/article/SB1000142405270 2303360504577411151135639534.html http://www.bls.gov/news.release/pdf/empsit.pdf
Unwinding Chinas leverage: China achieved a massive credit fuelled growth. As it attempts to achieve a beautiful deleveraging act, it restricts the availability of cheap money and hence curbs demand. This affects the EMs in three ways. Firstly, the countries that export manufactured goods to China are witnessing a decline due to reduction in import demand from China. Countries such as Taiwan and South Korea that export large quantities of manufactured goods to China are affected most due to this factor. Secondly, China has been a massive importer of commodities from certain EMs during its rapid growth phase.
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Treasury Management in Banks: A Technological Perspective ROMIL JOHRI

Romil is a first year student at IIM Bangalore. Prior to this he has worked for two years in the financial consulting space, after graduating from IIT Kharagpur.
Treasury Management in Banks: A Technological Perspective Over the years, Treasury management has come to play an increasingly important role in banks and in general for the financial industry. It serves various purposes such as maintaining liquidity for the bank, managing the financial and operational risks, and maximising the bank`s profitability through funding and investments in various financial products. Treasury Department Structure Primarily the treasury has the Fixed Income desk, Foreign Exchange desk and the Equities desk to handle transactions in these asset classes. Often banks have other desks allocated for various other types of asset classes as well. A bank`s treasury structure can be broadly divided into Front Office, Middle Office and Back Office. Front Office is responsible for the generation of trades, Middle office for the analysis and risk handling of trades and Back Office for the daily valuation and payment transfers for these trades. Each of them is an extremely crucial pillar for the growth of the bank.
A deeper look into Treasury Operations Treasury departments are supported by software systems called the Treasury Systems. Thousands of Delete text place phot transactions happen on a and daily basis by the bank`s treasury. These trades are booked on various complex derivatives and Kondor Plus, Calypso etc. Banks buy these systems from the vendors and implement them by customizing them to their requirements. Treasury Systems in detail These systems provide various functionalities such as trade repositories, deal booking functions, risk management tools, payment handling, market data integration, static data capabilities, database management etc. Usually they are very large and CAPTION YOUR PHOTO HERE comprehensive in their coverage but different Treasury Systems are strong and weak in different aspects. Two most commonly used treasury systems are detailed in Fig-1.
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In India Murex and Kondor Plus are two primary systems used by various private and public banks. Some of the examples are: ICICI uses Murex, ING Vysya uses Kondor plus, Kotak Mahindra uses Kondor Plus; internationally ANZ uses Murex and United Overseas Bank uses Wall Street. Often banks decide on these Treasury systems based on the kind of product-trades they are involved with. Murex for instance offers a very wide range of financial products that can be handled by it ranging from simpler loans/borrowings to more complex ones such as the accumulators. Hence banks dealing with such complex products find it suitable to use Murex. Kondor Plus is generally considered very effective in Forex Trades.
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With the advancements in the financial models and mathematical analysis in today`s banking industry, role of these Treasury systems have increased manifolds. Post the financial crisis, the risk management capabilities of these systems are being used extensively to analyse the credit and interest rate risks. This analysis is required for effective hedging of trades and deciding on the capital allocation for the trading desks. Methodologies such as Credit Value Adjustment are becoming increasingly prevalent to mitigate credit risk. Efficient implementation of these in treasury systems allows banks to monitor such risks. No successful bank can afford to ignore the strategic importance of a robust and state-ofthe-art treasury management system esp. in todays challenging regulatory environment Data Sources: Company Websites, Wikipedia
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Provides functionalities for a several Interest Rate Derivatives. Very useful for banks dealing in complex IR derivative products. Efficient models for cross asset structured products Clients: ICICI Bank ANZ Bank UBS
Considered very strong in handling Forex Trades. Easy integration with external third CAPTION YOUR PHOTO HERE party pricing tools. Efficient straight through processing and flexible platform Clients: o here. Kotak Mahindra Bank ING Vysya Bank Maybank
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ALGORITHMIC TRADING: INTERVIEW with Mr. Saurabh Das from Silverleaf Capital Services: About Silverleaf Capital Services: Silverleaf Capital Services is a Mumbai-based rm that has emerged as one of the leaders in the High Frequency Trading space in India within one short year of rolling out operations. Our work combines Machine Learning, artificial intelligence techniques and mathematical modelling with in-house low latency trading capability. About Saurabh Das: Saurabh is a co-founder of Silverleaf Capital Services. He is a self-taught developer who has worked in the fields of algorithmic trading and agent-based computational economics. Prior to forming Silverleaf, he has worked at KPMG in Business Consulting and at Morgan Stanley. He has a PGDM from IIM Ahmedabad and a Bachelors Degree in Engineering Physics from IIT Bombay. How did the idea of entrepreneurship come about? Why algorithmic trading? The idea of entrepreneurship didn't pop up in a day - it's a process that took time and a lot of thought. As with all of us who have had the luxury of a best-in-class education, it is ofttimes difficult to drop out of cushy jobs and into the uncertain world of entrepreneurship. The prime reason for algo-trading was that the financial markets are excellent provinggrounds. It is a very level playing field for new
entrants as compared to most industries. Given that I would know whether my company is succeeding or failing in a relatively short time span, Delete text and place phot entrepreneurship and algo-trading was very enticing and I took the plunge. What are the current trends that are popular in the area of algorithmic trading? What does Silverleaf Capital Service specialize in (solution offered to client)? Most firms in India are still running regular trend following and simple statistical arbitrage systems (dealing in underlying and its associated F&O contracts). Market-making on incentivized illiquid exchanges and commodity CAPTION YOUR PHOTO HERE arbitrage between CME and MCX has become popular. More advanced and latency focused firms are detecting and trading based on very short term patterns in the order book. Silverleaf, drawing on our skills in mathematical o here. design, specializes modelling, hardware & software in finding patterns to identify opportunities and in building low latency infrastructure to capitalize on them. How is the algorithmic trading business shaping up in India and how do you see Algotrading business changing in future as Indian financial markets develop further? Brokers are now much more willing to invest in technology for High Frequency trading than they were a few years ago. A lot of them are investing in developing in-house expertise rather than buying software and hardware from vendors.
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The share of algorithmically generated volumes is growing very rapidly leading to increased liquidity and turnover which is normally a good thing for algorithmic trading. Most exchanges are providing colocation facilities for HFT. NSE has started providing tick by tick data along with traditional snapshot data. We expect other exchanges to start providing tick by tick data feeds soon because that should automatically increase algo trading participation and turnover How is HFT different from Algo Trading? Broadly speaking, algo trading is execution of trades using an algorithm. Latency is not necessarily critical. For example, if a mutual fund wants to buy a very large quantity of a stock it can run an algorithm to execute the trade by placing orders slowly over the day to minimize losses because of market impact. HFT is the latency sensitive subset of algo trading. A fraction of a second delay in execution could cause you to either lose a trading opportunity or even create a trading opportunity for your competition - usually other HFT firms. What are your views on High Frequency Trading (HFT)? How do they affect stability in the markets? In India and worldwide, it has been shown that bid ask spreads and trading costs (market impact) are going down because of HFT. For example if a contract is being traded on multiple exchanges HFT firms are competing to ensure that a person wanting to buy the contract, with access to just one exchange gets a price as close as possible to the lowest among
all the exchanges. Research has even shown HFT to be driving out market manipulators too. What are the regulatory constraints you face as a part of the business? HFT has introduced a few new risks to market stability for which regulations are being modified. As per SEBI regulations exchanges ask firms to demonstrate strategies before they are approved. Audit trails of strategies have to be maintained and the systems are audited regularly. New measures like penalties for a low trade to order ratio have been introduced. Immediate or Cancel orders have been banned in commodity exchanges.
Regulators round the world have concerns about the systemic risks of algorithmic trading on interconnected financial system. There have been o here. instances of malfunctions and increased volatility in the markets. What is your opinion on that? Most algorithms are based on models which have been trained only for very normal market conditions. In extreme market conditions with low liquidity these algorithms can cause short lived volatility. Malfunctioning algorithms can also trigger big market moves in a very short span of time. This is where the regulators are stepping in. Measures like tighter circuit filters have been put in place. Regulators have defined mandatory risk measures which all algorithms need to have in place. The exchanges check the functioning of each of these risk measures before approving a strategy to run.
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Current Scenario The Indian retail sector is one of the key drivers of the Indian economy. Contributing to a mammoth 15-20% of the GDP and around 810% of the total employment, Indian retail is a $500 billion industry and has been growing at around 11% for the past 3 years, with organised retail contributing to around 8% of share of the total retail market. A vertical wise break-up of the organised retail sector in India is as under.
Share in Indian Organised Retail Market
The attractiveness of the apparel sector in organised retail can be explained as under: Retail Vertical Revenue/ sq ft. Delete text and place (per phot store per day) Food, Grocery and 5000-7000 Beverages Footwear 8000-10000 Apparel 10000-12000 Consumer durables 20000-25000 The apparel vertical thus not only has a superior revenue per square feet but also enjoys a higher margin when compared to other verticals, making apparel retail the most attractive vertical especially in organised retail. CAPTION YOUR PHOTO HERE Top players Indian retail sector:
Consume r Electroni cs 8%
Beauty & Personal Footwear Care 4% 3% Others 19%
Clothing and Apparel 33%
Aditya Birla group
Pharmac y 2%
Home and interior 5% Mobile & telecom 11%
Food 9%
Jewellery 6%
Over 512 supermarkets and 16 hypermarkets. o here. Has become a bigger player after the recent acquisition of Pantaloon retail Shoppers Around 3.5 million square feet of Stop store area over 25 cities and around 50stores Tata Around 120 stores with an average Trent store area of 40000 sq feet across its 3 major formats Westside, Star Bazaar & Landmark Spencers Store area of around 1 million sq ft Retail over over 45 cities and 200 stores Reliance More than 1300 stores servicing retail around 2.5 million customers every week
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Online Retail: Currently, a $1.6 billion market, the Indian online retail market has grown rapidly due to increasing internet penetration, development of the financial services sector, increased adoption by the youth, ease of use, additional payment options like EMI and cash on delivery, discounts offered, time savings, customisation options, testimonials, reduced inventory and real estate expenses, transparent return policy and easy comparison shopping.
Internet Retail in India ($ millions)

108 2005 302 2007
543
2009
930
2011
1355
2054
2013 2015 (exp)
Source: Euromonitor, Mckinsey
Among the top players, only 2 players have seen positive returns as per the latest financials. Thus, declining margins has been a trend in the Indian retail sector, especially in organised retail, adversely affecting the profitability of the players. The recent deals in the retail sector, (Aditya Birla & Pantaloon retail; split up of the Walmart-Bharti JV, postponement of IKEAs entry in India etc.) can in short be attributed to strategies to counter dwindling profit margins
Aditya Birla Deal to acquire 50.01% in Delete text and place phot via Pantaloon Retail Pantaloon retail Aditya Birla Nuvo Ltd. (deal size estimated to be 13 times EBITDA and around Rs. 3200 crs) Walmart JV exit Walmart exits after a 6 year long partnership with Bharti retail Flipkart PE A $ 200 mn PE funding funding (6th round of PE funding), from its existing investors, the largest CAPTION YOUR PHOTO HERE raised by any ecommerce company in India. Myntra PE Raised around $25 million o here. funding from existing investors, Accel partners and Tiger global Arisaig India Acquires 2.36% stake in Trent Trent retail increasing its overall ownership to 9.88% Arvind Lifestyle The acquisition has Debenhams, enabled Arvind to Nautica & Next diversify into luxury and Business speciality retail in the apparel sector IKEA entry into Investment proposal of India Rs. 10,500 crs, approved by the cabinet via the FDI route. However, first store not likely to open before 2016
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FDI in Retail:
4%
6% Delete text and place phot FDI % share 17% 36%
3% 3%
9%
Manufacture
15% 7%
Source: AT Kearney Development index
Report:
Global
Retail
Though the government in 2012 has allowed 100% FDI in single brand retail and 51% FDI in multi-brand retail, the reforms are yet to yield a substantial impact in foreign currency inflows. In 2011, India was seen to be one of the favourable destinations for retail. However Indias rank has slipped in the wake of prevailing corruption, policy paralysis and absence of transparent regulation with regards FDI in retail due to unclear procurement policies and opposition by various states
FDI inflows from retail have been stagnating in the recent years. Also, even though the FDI inflows into the retail sector have doubled in the last 5 years, it just constitutes 4% of the CAPTION YOUR PHOTO HERE total FDI inflows, which isnt substantial given that the sector contributes to around 15% of Indias GDP
o here. Future Expectations:
FDI -Retail & Wholesale trade (USD mn)

FDI -Retail & Wholesale trade (USD mn)
Short term growth The immediate growth of the industry is heavily dependent on macro-economic factors affecting consumer sentiment. With persistent inflation, growing current account and fiscal deficit and negative investor sentiment may well impact the short term growth of the sector. Long term Growth and challenges The long term growth of the sector is expected to robust, with a CAGR of 15-20% for at least the next 5-10 years, with demand fuelled by higher purchasing power, growth of the Indian financial sector, changing consumption patterns, higher investments and better technology.
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536
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Organised retail in India has been growing at a rapid pace. Despite its low current penetration of around 8%, organised retail is expected to constitute around 20% of the retail market in the next 5-7 years. Also within organised retail, food and grocery retail is expected to grow the least, due to lowest penetration of organised retail, very low margins, affecting profitability of new entrants struggling to break-even. On the other hand long run growth in apparel, footwear, jewellery, pharmacy, beauty and healthcare and consumer electronics and durables are expected to be more robust. The vertical-wise growth predictions of the India retail sector are as under. The Indian online retail industry is expected to double in the next 2-3 years and is expected to grow at a CAGR of around 20-25% at least for the next 10 years. With regards FDI in retail, Investor confidence is still not high, this is proven by the fact that IKEA, even after getting the cabinet approval has decided not to open its first store before 2016. Thus just policy announcements are not adequate. Steps have to be taken to ensure a positive signalling effect, to encourage investment in the retail sector, one of the largest contributors to the GDP. This is even more critical given Indias current account deficit, so as to at least ensure capital inflows, so as to strengthen the balance of payments position and the depreciating rupee. The retail sector in India faces huge challenges from the point of view of financial constraints and inferior supply chain infrastructure. Financial constraints are faced more by the retailers in the unorganised retail sector. [Type text] 32
Low profit margins, lack of credit and huge investments needs are the 3 key problems faced by the retailers especially in the unorganised sector. With unorganised retail Delete text and place phot currently constituting a substantial 92% of Indian retail, these problems need to be seriously addressed, or else the sector may get adversely affected making the businesses financially unviable with the entry of new players in organised retail. Protectionist policies should not be implemented, but the government should ensure that this sector is given priority access to credit and should encourage banks and other financial institutions to extend credit to the unorganised retail sector.
Supply chain challenges are a huge hindrance, especially in the food and grocery retail segment. Supply chain losses are of around 2030% are can be said to be one of the prime o here. causes of food inflation in India. Also the low margin based food and grocery retail vertical needs a boost and supply chain infrastructure development can be factor reducing procurement costs and thus increasing margins and making food and grocery retail more attractive. The assumption of improved supply chain with the entrance of foreign players via the FDI route is also flawed. Pro-active investments in supply chain need to be undertaken to encourage foreign players to invest in the retail sector. Thus overcoming the financial and supply chain challenges would indeed further bolster the growth of the Indian retail sector, which plays a critical role in Indias growth story. Data Sources: www.rbi.org, Reuters, www.michealpage.com Bloomberg,
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MERGERS AND ACQUISITIONS
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OVERVIEW
The erratic pattern of the M&A industry since the financial crisis has led to lukewarm performance throughout the bulge bracket, boutique and other firms across the globe. A brief synopsis of the past 12 months (October 12 September 13), gives the following global picture. Number of Deals 27059 Value $ 2.63 Trillion Average Disclosed Deal $175.75 Size Million Average Premium 28.31% Without any surprise U.S. is at the heart of deals, while industry wise Telecom has been at the core of consolidation both in terms of acquirers and targets, clearly visible in the following charts.
Topping the M&A deal table of the 10 largest deals (globally) is the Vodafone Verizon CAPTION YOUR PHOTO HERE deal, with a whopping deal size over $130.1 billion. Another news maker has been the strategic deal between Microsoft and Nokia, poised to be a game changer for Microsoft. It has been discussed in greater detail in the next o here. section. The following page contains the table with reference to Oct- 12 to Sept- 13 for the top 10.
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Deal Date Target Name Acquirer Name Seller Name Vodafo ne Group PLC 130,100 Value ($millio n) 02092013 15102012 15042013 03102012 22102012 14022013 22102012 15072013 09082013 Cellco Partnershi p Sprint Communi cations Inc Sprint Communi cations Inc T-Mobile USA Inc DISH Network Corp Deutsch T-Mobile US Inc e Teleko m AG TNK-BP Ltd Rosneft OAO Berkshire HJ Heinz Co Hathaway Inc,3G Capital TNK-BP Ltd Rosneft OAO Caisse des French Republic Depots et Consignatio ns Koninklijk e KPN NV America Movil SAB de CV 22,695 23,361 BP PLC 26,379 27,403 28,000 28,976 37,723 Softbank Corp 39,739 Verizon Communica tions Inc
Following is the league table which is led by the bulge bracket firms, announced in the same time Delete text and place phot frame.
Adviser Rank (Market Share) Goldman Sachs & Co JP Morgan Morgan Stanley BofA-ML Barclays Citi Deutsche Bank AG Credit Suisse UBS Lazard Ltd 9 10 317,194 235,541 2,143 1,126 148 209 8 331,441 1,563 212 3 4 5 6 7 573,221 560,118 440,799 344,374 o here. 341,387 1,997 2,569 2,182 1,655 2,081 287 218 202 208 164
Total Deal Size ($Millions) 653,787
Average Deal Size ($Millions) 1,981
Deal Count 330
573,344
2,559
224
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Group LP, Francisco Dell Inc 21,228
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MICROSOFT-NOKIA DEAL Announced Date Target Name 03-09-2013 Nokia (Devices and Services Business) Acquirer Name Microsoft Corp Announced Total Value $ 7.2 billion Acquirer Financial Goldman Sachs Advisor Target Financial Advisor JP Morgan Deal Sector Technology In a game-changer, worlds largest software maker by revenues - Microsoft Corporation announced on 3rd September, 2013 that they will purchase largely all of Nokia's Devices & Services business, license its patents, and mapping services. The transaction terms require Microsoft to pay 3.79 billion to purchase almost all of Nokia's Devices & Services business, 1.65 billion to license Nokia's patents, for a total transaction price of 5.44 billion in cash. Funding will be sourced primarily through its cash resources outside US. Nokia will pay the software giant 37.9 million if its shareholders do not approve the deal. Approximately 32,000 people are expected to transfer to Microsoft. Nokia will retain its patent portfolio and will grant Microsoft a 10-year nonexclusive license to its patents. Microsoft will grant Nokia rights to use Microsoft patents in its HERE (formerly Nokia Maps) services.
In addition, Nokia will grant Microsoft an Delete text and place phot option to extend this mutual patent agreement in perpetuity. As part of the transaction, Nokia is assigning to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements. The deal revolves around increased synergies, faster innovation, unified branding and marketing for Microsoft. Numerous reports have dubbed Steve Ballmers attempt to synchronize mobile hardware and software services as replicating Apples. Nokias shareholders wereHERE expecting it to make a CAPTION YOUR PHOTO strategic shift to the leading mobile operating system Android for the past one year. Analysts insights suggest that poor numbers from the exclusive Windows OS strategy here. initiated in February o 2011 as a major reason for the deal. Nokia alone constituted more than 90% of Windows phone sales in the first half of 2013. However Microsoft aims to leverage the success from Lumia range of phones. Lumia phones accounted for more than 75% of Windows phones across the globe in 2012-13. Lumia handsets have grown in sales in each of the last three quarters, with sales reaching 7.4 million units in the second quarter of 2013. Another reason doing the rounds is the close relationship between Nokia CEO Stephen Elop and Microsoft, with the former being erstwhile head of Business Division in Microsoft credited for launching Office 2010. In fact, Nokia expects that CEO Stephen Elop and
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others would transfer to Microsoft at the anticipated closing of the transaction. A sneak peek into numbers illustrates that operations planned to be transferred to Microsoft generated an estimated 14.9 billion, or almost 50 percent of Nokia's net sales for the full year 2012. Microsoft expects the deal to be accretive to adjusted earnings per share in FY 15. As part of the deal, Microsoft will procure the Asha brand and will use the licensed Nokia brand with existing Nokia mobile phone products. Nokia will continue to own and manage the brand. This provides an opportunity to Microsoft to extend its service offerings to a larger consumer base across the globe, while letting Nokia's mobile phones to serve as a platform for Windows OS phones. It will take over Nokia's Mobile Phones division which had sales of 53.7 million units in Q2 of 2013.Microsoft will also immediately make available to Nokia 1.5 billion of financing in the form of three 500 million tranches of convertible bonds. Another important part in the deal is the restriction up to end of 2015 from further licensing the Nokia brand with respect to mobile devices sales. Furthermore, the restriction is on using the brand on its own devices as well, which implies Microsoft will call the shots. Fingers are crossed over the expected synergies for the two companies
VODAFONE-VERIZON DEAL
Announced Date Target Name Acquirer Name
02-09-2013 Cellco Partnership (Seller Vodafone Plc) Verizons Communications Inc $ 130.1 billion
Announced Total Value Acquirer BofA ML/ Barclays/ Financial Guggenheim Partners/ Advisor Adviser/ JP Morgan/ CAPTION YOUR PHOTO HERE Morgan Stanley Target Financial Goldman Sachs/ UBS Advisor Deal Sector Communication
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September 2, 2013 marked a historic day in the world of Mergers & Acquisitions when Verizon Communications Inc. announced that it will acquire Vodafone's 45 percent ownership in Verizon Wireless for a whopping $130 billion, making it the 3rd largest M&A deal ever. The deal size is worth more than the GDP of more than 70% of the countries on this planet! It is the largest deal in more than a decade. The previous largest deal was worth $203 billion when Vodafone acquired Germanys Mannesmann AG in 2000. M&A advisory league tables have shaken up globally with six
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investment banks leading mentioned in the table. The expected to be incremental to EPS by 10 percent immediately.
the deal as transaction is the company's approximately
Verizon also announced an increase in quarterly dividend by 53 cents per share simultaneously with the deal. This increases Verizon's dividend 6 cents per share, from $2.06 to $2.12 per share YoY. The bulk of the proceeds from the deal - 71% will go to Vodafone shareholders, who could cash in their Verizon shares to take the entire windfall as cash. The transaction would provide Verizon with 100 percent ownership in the US after 13 years of partnership with Vodafone. Chairman and CEO Lowell McAdam claims that as a wholly owned entity, Verizon Wireless will be able to exploit the continuing progress of consumer demand for wireless, video and broadband services, and also get the most out of the changing competitive dynamics in the market. He expects the transaction to close in the first quarter of 2014. Verizon Wireless sheer size can be adjudged from 100.1 million retail connections, largest 4G LTE network, 73,400 employees and more than 1,900 retail locations in the US, as of the end of Q2 2013. It was started in 2000 as a joint venture of Verizon and Vodafone. It reported $75.9 billion in operating revenues in 2012, $39.5 billion in the first half of 2013, and an impressive operating income margin of 28.7 percent in 2012 and 32.6 percent in the first half of 2013, as per company reports. [Type text] 32
The deal break up is as follows: The common Delete text and place phot stock portion valued at approximately $60.2 billion will be distributed to Vodafone shareholders, with a minimum price of $47 and a maximum price of $51. The cash portion of $58.9 billion will be funded by a $61 billion bridge credit agreement with several banks. The bond issue is the largest ever above Apples bond issue of $17 billion. In addition, Verizon will issue $5 billion in notes payable to Vodafone. Analysts suggest that Verizon was keen towards the deal due CAPTION YOUR PHOTO HEREto anticipated economic recovery in US and rising interest rates. Also, Verizon would no longer have to operate its wireless and wire line business separately, and helps it take decisions much faster. However here. the high price paid analysts are worried oabout at a time when growth is slowing in US wireless industry and smaller rivals are competing aggressively on price. Shareholders have not been enthusiastic after the deal as reflected by the stock prices. Vodafone too, has been focused towards reducing debt levels and facilitating acquisitions particularly in Europe. The deal also involved Verizon giving out its 23% share in Vodafone Italia for a value of $3.5 billion as part of the consideration. Its stock prices indicate a positive response from the shareholders. Data Source: Bloomberg (including charts and tables)
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PERSONALITY PROFILES
Patrick Dlamini
Xi Jinping
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PATRICK DLAMINI
CEO, Development Bank of Southern Africa (DBSA)
Mr. Dlamini has previously held high-level Delete text and place phot management roles including chief executive officer of the Air Traffic and Navigation System, business unit executive at Transnet and While the establishment of a BRICS development bank was suggested at the Fourth BRICS Summit last year, Mr. Dlamini welcomed and appreciated the establishment of this bank from the BRICS bloc. He believed that it would play a critical role in advancing infrastructure funding to promote development and regional integration on the continent. This bank would ensure that the infrastructure development needs of member states, in particular Africa, would receive the muchneeded infrastructure funding to fill up the here. infrastructural gaps o of the continent" Mr. Dlamini suggested. Also the bank would establish a pool of money, called Brics contingent reserve arrangement, for the member states to be cushioned against any economic shocks in future and lessen their dependence on Western institutions further. Although these aims challenge the traditional roles of the International Monetary Fund and the World Bank, institutions that in their 50year life have been dominated by Europe and the United States. The underlying motivation is to assert the collective interests within the BRICS, though they are hard to define, and do so against established Western ones.
The Chief Executive Officer of the Development Bank of Southern Africa, Patrick Dlamini got recognized this year by Worldwide Whos Who for his dedication, leadership and excellence in banking and financial services. Having 16 years of organizational experience, he assumed his current position as chief executive officer of the Development Bank of Southern Africa in September 2012. Strategic formulation, business management and financial modeling are some of his areas of expertise. He is responsible for overseeing the management of the bank on a day-to-day basis and implementing the financial institutions strategic vision.
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XI JINPING
President of the People's Republic of China
In spite of the fact that China's GDP outweigh Delete text and place phot the combined GDP of the other four members of BRICS, it has avoided dominance being a cause of political strife with its partners. Xi Jinping has been a strong proponent of strengthening communication and coordination, and safeguarding common interests within the BRICS Nations. He understands and highlights how the economy of these countries plays a crucial role in contributing to the joint development, stimulating the global economic growth and countering international financial crises.
In an informal meeting of BRICS leaders on Sept. 5, 2013 in St. Petersburg, the Chinese leader exchanged views and coordinated positions on cooperation with BRICS here. countries, as well oas major regional and international issues. The strengthening Africa-China has been another focus point in his realm. The bilateral strategic mutual trust and support and practical cooperation between China and Russia have been enhanced further with President Xi Jinping's recent visit to Russia He has also been a promoter for speeding up the establishment of the BRICS Development Bank, and making a contingent reserve arrangement as soon as possible. He is a true believer that BRICS countries should strengthen collaboration to pursue the common interests.
Xi Jinping is the President of the People's Republic of China, the General Secretary of the Communist Party of China, and the Chairman of the Central Military Commission. He is also an ex officio member of China's de facto top decisionmaking body, the CPC Politburo Standing Committee.
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NEWS ROUNDUP
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NEWS ROUNDUP
BEZOS, AMAZONS FOUNDER, TO BUY THE WASHINGTON POST
FED
DECIDES
NOT
TO
BEGIN
TAPERING QE3 The Federal Reserve announced in its Delete text and place phot September Federal Open Market Committee (FOMC) meet that it would not being to taper its $85 billion a month bond-buying program known as Quantitative easing (QE3). The Fed will continue to purchase mortgage-backed securities at a pace of $40bn a month and Treasury securities at a pace of $45bn a month. It made no change to its 6.5 per cent unemployment rate threshold for a rise in interest rates. The vote for the decision was 9-1 in favor.
The Washington Post, the newspaper whose reporting helped topple a president and inspired a generation of journalists, is being sold for $250 million to the founder of Amazon.com, Jeffrey P. Bezos, in a deal that has shocked the industry. Donald E. Graham, chairman and chief executive of The Washington Post Company stressed that Mr. Bezos would purchase The Post in a personal capacity and not on behalf of Amazon the company. The $250 million deal includes all of the publishing businesses owned by The Washington Post Company, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing. The Washington Post company plans to hold on to Slate magazine, The Root.com and Foreign Policy. According to the release, Mr. Bezos has asked Ms. Weymouth to remain at The Post along with Stephen P. Hills, president and general manager; Martin Baron, executive editor; and Fred Hiatt, editor of the editorial page.
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The Fed cut its growth forecast and confounded expectations that it would start to slow its third round of quantitative easing as the rate-setting FOMC said it would await more evidence that progress will be sustained before adjusting the pace of its purchases. It further stated The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor. market.
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NEWS ROUNDUP
The decision suggests the Fed was alarmed by the sharp rise in long-term interest rates that followed its June announcement of a likely scenario for tapering its QE3 programme and wanted to push back against markets and by the prospect of a big fiscal showdown in the US Congress in the coming weeks. Q2 ROUNDUP S&P 500 Total earnings for the S&P 500 companies were up +2.5%, with 62.6% beating earnings expectations and a median surprise of +2.9%. Most of this growth has come from top-line gains, with total revenues for the companies up +1.9% and 50.1% beating revenue expectations, with a median revenue surprise of +0.2%. Strong results from the Finance sector played a big role in giving respectability to the aggregate Q2 data. Total Finance sector earnings are up 30% on 8.5% higher revenues, with beat ratios of 76.9% for earnings and 65.4% for revenues.
Total Technology sector earnings are down 10.1% on 0.4% higher revenues, the weakest Delete place phot performance fromtext theand sector in a while. The hardware and software industries individually bring in roughly 45% and 35% of the Technology sectors total quarterly earnings. Excluding Technology, total S&P 500 earnings would be up 5.4% in Q2. SAC CAPITAL INDICTED FOR INSIDER TRADING SAC Capital Advisors LP, the $14 billion hedge fund founded by Steven A. Cohen, was indicted for perpetrating what prosecutors CAPTION YOUR PHOTO HERE called an unprecedented insider trading scheme that was revealed as part of the governments six-year crackdown on Wall Street crime.
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Excluding finance the total Q2 earnings growth for the S&P 500 turns negative down 2.9%. Weakness in the Technology sector spotlights the broad growth challenge outside of Finance, though Basic Materials (total earnings down 11.1%) and Energy (-12.7%) also played roles.
SAC was charged with four counts of securities fraud and one count of wire fraud in an indictment unsealed in Manhattan federal court. The alleged scheme, which involved more than 20 companies and went back as far as 1999, helped reap hundreds of millions of dollars in illicit profits, the U.S. said.
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NEWS ROUNDUP
The charges and related regulatory action may result in the firms dissolution. While Cohen, 57, wasnt charged in the indictment, prosecutors described him as the fund owner and said he encouraged SAC employees to obtain trading information from company insiders while ignoring indications that it was illegal. The U.S. described separate insider trading schemes by at least eight former SAC fund managers and analysts, including Noah Freeman, Donald Longueuil, Jon Horvath, Wesley Wang, Mathew Martoma, Richard Choo-Beng Lee and Michael Steinberg. BLACKBERRY TO BE ACQUIRED BY A GROUP LED BY FAIRFAX FINANCIAL BlackBerry Limited announced on 24th September that it has signed a letter of intent agreement (LOI) under which a consortium to be led by Fairfax Financial Holdings Limited (Fairfax) has offered to acquire the company subject to due diligence.
The consortium would acquire for cash all of the outstanding shares of BlackBerry not held by Fairfax. Delete Fairfax, which owns approximately text and place phot 10 percent of BlackBerrys common shares, intends to contribute the shares of BlackBerry it currently holds into the transaction. However, Blackberry said it was not in exclusive talks with Fairfax and would continue to "actively solicit, receive, evaluate and potentially enter into negotiations" with other potential buyers. Back in 2008, Blackberry was a $83 billion company. Currently it is around $4.4 billion. Just three years ago, BlackBerry had a market share of nearly 70% among business customers in North America, according to the research CAPTION YOUR PHOTO HERE firm IDC. This year, that figure has dropped to around 5%, IDC says. Globally, BlackBerry's business market share has slipped to around 8% from 31% in 2010, according to IDC.
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DETROIT FILES FOR BANKRUPTCY The city of Detroit filed for Chapter 9 bankruptcy on July 18, 2013. It is the largest municipal bankruptcy filing in U.S. history by debt, estimated to be $1820 billion, exceeding Jefferson County, Alabama's $4 billion filing in 2011. Detroit is also the largest city by population in the U.S. history to file for Chapter 9 bankruptcy, more than twice as large as Stockton, California, which filed in 2012. Detroits population has declined from a peak of 1.8 million in 1950. Numerous factors over many years have brought Detroit to this point, including a shrunken tax base but still a huge, 139-squaremile city to maintain; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing.
The letter of intent contemplates a transaction in which BlackBerry shareholders would receive U.S. $9 in cash for each share of BlackBerry share they hold, in a transaction valued at approximately U.S. $4.7 billion.
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NEWS ROUNDUP
US UNEMPLOYMENT RATE AT 5 YEAR LOW The Labor Department said Friday, September 6 that the unemployment rate dropped to 7.3 percent, the lowest in nearly five years. But it fell because more Americans stopped looking for work and were no longer counted as unemployed. The proportion of Americans working or looking for work fell to its lowest level in 35 years.
th
ACTIVITIES OF TEAM NETWORTH: Networth operates under four broad verticals: I. Events Animal Spirits: A series of 4 intersection Delete text and place to phot competitions for PGP1 batch give them a flavor of various finance domains. These include trading events like The PIT & Munaafa, finance quiz FinQ & stock pitching Stock 20-20. Vista Events: Networth conducts 3 events at Vista, the IIMB Business festival. These include game-theory based Get-Nashty, portfolio trading based Master the Market, and Convexity Calls. Corporate Events: We aim to reach out to CAPTION YOUR PHOTO HERE market participants (buy/sell side) to conduct workshops/seminars for the students.
Data suggested that most of the hiring in August was in lower-paying industries such as retail, restaurants and bars, continuing a trend that began earlier this year. Retailers added 44,000 jobs and hotels, restaurants and bars added 27,000. Temporary hiring rose by 13,000. Manufacturers added 14,000, the first gain after five months of declines. Construction jobs were unchanged in August. Auto manufacturers boosted hiring in August. Some of the jobs were workers who were rehired last month after being temporarily laid off in July, when factories switched to new models. Americans are buying more cars than at any time since the recession began in December 2007. And U.S. factories expanded in August at their fastest pace in more than two years.
Fin Gyaan Sessions: We conduct sessions for the PGP1s to help o them here. prepare for finance interviews for summer internships. II. Publications: Half-yearly IIMB Bottomline
finance
magazine
Weekly business digests: quick overview of the financial world through the week Biweekly Deal-Fix: Fortnightly review of M&A deals, new capital market offerings Compilation of interview experiences and questions from last years summer placements Compilation of current macroeconomic happenings around the world in Fin Fastrack Budget Review
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MARKET DATA
Index DJIA S&P 500 Nasdaq Composite Russels 2000 STOXX 50 FTSE CAC 40 DAX Shanghai Composite Hang Seng Nikkei 225 FTSE Straits Times Nifty Sensex BSE Midcap BSE Smallcap Bankex BSE IT BSE Auto BSE Metals BSE Healthcare WTI Crude ($/bbl) Brent Crude ($/bbl) Comex Gold ($/oz.) CRB Commodity Index Copper Natural Gas USD INR GBP INR EUR INR INR JPY US 10 Year Yield German 10 Year Yield Japan 10 Year Yield India 10 Year Yield
Q2 2013 Open 14578.54 1569.18 3268.63 951.41 2697.77 6411.74 3729.28 7806.12 2229.46 22203.93 12371.34 3308.10 5697.35 18890.81
Q2 2013 Close 14909.60 1606.28 3403.25 977.48 2604.51 6215.47 3738.91 7959.22 1979.21 20803.29 13667.32 3150.44 5842.20 19395.81
% Change
Q3 2013 Open 14911.60 1609.78 3430.48 981.30 2604.51 6215.47 3763.17 8000.02 1965.99 21004.56 13746.72 3150.44
Q3 2013 Close 15129.67 1681.55text Delete 3771.48 1073.79 2776.23 6462.22 4143.44 8594.40 2174.67 22859.86 14455.80 3167.87
% Change 1.45 and4.27 place 9.04 8.61 6.19 3.82 9.18 6.92 9.60 8.12 4.91 0.55 -1.72 0.14
Half Yearly % Change 3.78 7.16 15.38 12.86 2.91 0.79 11.11 10.10 -2.46 2.95 16.85 -4.24 0.67 2.59
US Markets
2.22 2.31 3.96 2.67
phot
European Markets
-3.58 -3.16 0.26 1.92 -12.64 -6.73 9.48 -5.00 2.48 2.60
Asian Markets (excluding India)
Indian Markets and sectoral Indices

5834.10 5735.30 CAPTION YOUR 19379.77 PHOTO HERE 19352.48
11414.95 6898.91 9978.50 8757.85 8032.92 97.36 110.15 1596.80 296.39 340.00 3.97 54.29 82.42 69.83 1.73 1.87 1.29 0.59 7.98
11617.25 6255.10 10715.77 7753.76 8845.26 96.56 102.16 1233.70 275.62 305.05 3.57 59.39 90.51 77.65 1.67 2.49 1.73 0.85 7.46
1.74 -10.29 6.88 -12.95 9.18
11597.45 6206.07 10690.42 7760.49 8853.74 96.58 101.90 1232.90 276.76 303.20 3.55 59.47 90.35 77.48 1.67 2.50 1.73 0.89 7.42
9617.80 7839.26 10996.59 8371.23 9463.81 102.33 108.37 1326.50 285.54 332.30 3.56 62.62 101.07 84.52 1.57 2.61 1.78 0.69 8.76
-20.58 20.83 2.78 here. 7.30 6.45 5.62 5.97 7.06 3.07 8.76 0.37 5.03 10.60 8.33 -6.25 4.16 2.98 -29.74 15.27
-15.74 13.63 10.20 -4.41 17.81 5.10 -1.62 -16.93 -3.66 -2.26 -10.30 15.34 22.62 21.04 -9.04 39.49 38.01 15.49 9.85
Commodities
-0.83 -7.82 -29.43 -7.54 -11.46 -11.33
Exchange Rates
8.59 8.93 10.07 -3.60 24.73 25.41 30.36 -6.87
Government Bond Yields
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REACH US AT: networth@iimb.ernet.in
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TABLE OF CONTENTS

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Wailing India: lack of Diagnostics, Prof. Charan Singh

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DR. CHARAN SINGH

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IMPACT INVESTING PUTTING A HUMANE FACE TO FINANCE*

Charan Singhs Photo

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third party monitoring mechanism.

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Figure 1 Impact Investing eco-system3

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GST: Game changer or name changer!!!

Charan Singhs Photo

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GOOD MONEY HABITS CAN CHANGE YOUR LIFE

Charan Singhs Photo

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The slowdown of BRICS

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CAPTION YOUR PHOTO HERE

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Treasury Management in Banks: A Technological Perspective ROMIL JOHRI

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Beauty & Personal Footwear Care 4% 3% Others 19%

Clothing and Apparel 33%