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Agenda for the presentation World investment outlook. Analysis of the Japanese Securities market. Analysis of the Indian Securities market. Analysis of the Chinese securities market. External factors for Investment. Conclusion.
REASONS FOR DEFLATION The return of deflation for the first time since August 2006 had been expected but there is a fear that flat consumption and a stagnant job market will strengthen the possibility of a double-dip recession. In the 1990s, consumers stopped spending in the expectation that prices would fall further. Faced with falling profits, companies were forced to squeeze wages, shed jobs and cut production. This situation is again expected to come.
Confidence survey measures the level of optimism that people who run companies have about the performance of the economy and how they feel about their organizations’ prospects.
Business confidence surveys can provide useful signs about the current condition of the economy, because companies often have information about consumer demand sooner than government statisticians do.
FII INDIA FII in India are regulated by SEBI and RBI, highly regulated. India investment in Securities in primary and secondary markets including shares, debentures and warrants of companies, unlisted, listed or to be listed on a recognized stock exchange in India. In Indian spot market, FIIs will not be allowed to issue P-Notes more than 40 per cent of their assets under custody, at the rate of 5 per cent of their assets.
Chinese regulators. People’s bankof China China Securities Regulatory Commission (CSRC) State Administration of Foreign Exchange (SAFE) QFII-Qualified Foreign Institutional Investors
Chinese Securities Market The Shanghai Stock Exchange (SHSE)established on Dec19,1990 Shenzhen Stock Exchange (SZSE) on July 3, 1991. The Hongkong Stock Exchange goes back to 1871. .
QFII in China A QFII invest in (i) publicly listed shares on the Shanghai or Shenzhen Stock Exchange other than A shares; (ii) publicly traded treasury bonds, convertible bonds and corporate bonds; (iii) other financial instruments approved by CSRC. Regulation on QFII (i) An individual QFII may not hold more than 10% of the total outstanding shares of any single listed company (ii) in any single listed company, shares held by all QFIIs may not exceed 20% of the total outstanding shares of the listed company. 76 regd. QFII in China
HIGH INFLOW VIS-A-VIS LOW INFLATION Any country experiencing very rapid productivity growth in the tradable goods sector will see a rise in the real value of its exchange rate. central bank intervene net current account inflows should cause excess domestic monetary expansion Domestic prices must rise total appreciation in the past decade has been much less than the relative growth in productivity Rapid money growth should have pushed China into an inflationary spiral
But this not the Case in China…. Low inflation because of Financial repression the vast bulk of Chinese savings is in the form of bank deposits, and the deposit rate is set at extremely low levels. that monetary growth is channelled not into household demand but rather into the production of more goods. Financial repression leads to overinvestment, asset bubbles, and rising excess capacity.
Fixed Income Instruments Outstanding in Chinese Bond Market