Economy analysis asia

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Economy Analysis of Three Asian Countries: India, china and Japan.

Economy Analysis of Three Asian Countries: India, china and Japan.

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  • World economy is dominated by service sector------Most developed nation are driven by service sector.Countries like China……has a lot potential to grow in service sectorm which is nt the current senarioJob less growth.
  • Japan is having a internal debt contradicting the situation at Greece ……..China has public debt to increase liquidity.
  • What is the significance of this ----investment as a percent of GDP in developing economies should high ….As seen from the graph
  • China’s growth is phenomenal……driven by FDI investment…..Has a positive current account….
  • All the govt. spending can change their direction once there is aexternal event like war withpaakistanNaxal issues
  • As a developed economy….. Contribution from services is the maximum..more than the world level.
  • Jan 2009 …..japan highly depened on cars and electronics …….. With slump in demand in 2009 ….. GDP dip
  • Base effect …… slump in demand 2009
  • Export driven economy…… high trade surplus ….. Lead to appreciate ……
  • Although the interest rate in low …… the real interest rate here is around 2% because of deflation……..
  • Belive in investment retun thru dividends……. Rather capital appreciation ….. As less growth options
  • Japanese Bond is not attractive in terms of yield …………..
  • Deflation reason ::????????
  • the domestic monetary base expands without a corresponding increase in production: too much money begins to chase too few goods and services
  • FII--- invest in futures only in india
  • Moonsoon related inflation …….Huge FII inflows….Huge domestic demand….
  • More companies going for external debt …… as interest at low cost debt available in foreign market……
  • STT- Security transaction TAX… .075% per tranaction ( turnover)TAX based on profits .
  • Perrmission-register-investment quota-qualifiedfii
  • The Chinese stock market has a unique feature with dual classes of stocks: A-shares and B-shares. Moreover,only domestic residents initially were permitted to trade A-shares, which are denominated in the Chinese currency Renminbi. On the other hand, B-shares are issued in the form of registered shares and are subscribed and traded in foreign currencies Shanghai B-shares are traded in the U.S. dollar, and Shenzhen B-shares are traded in the Hong Kong dollar. B-share markets are designed to provide an additional channel for foreign capital inflows, thereby enhancing the evolvement of China’s securities market.H shares refers to the shares of companies incorporated in mainland China that are traded on the Hong Kong Stock Exchange. Many companies float their shares simultaneously on the Hong Kong market and one of the two mainland Chinese stock exchanges.Huge price discrepancies between the H shares and the A share counterparts of the same company are not uncommon. A shares generally trade at a premium to H shares as the People's Republic of China government restricts mainland Chinese people from investing abroad, and foreigners from investing in the A-share markets in mainland China.Red chips stocks (simplified Chinese: 红筹股; traditional Chinese: 紅籌股; pinyin: hóng​chóu​gǔ​; Cantonese Yale: hung4 chau4 gu2) are the stocks of mainland China companiesincorporated outside mainland China and listed in Hong Kong.
  • http://www.szse.cn/main/files/2010/07/05/199587143268.pdf
  • 37% from exportsThey enjoy a positive current account.To equate BOP china buys foreign assets ….

Transcript

  • 1. Investment opportunity in asian countries
  • 2. 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.
  • 3. World
  • 4. Public debt
  • 5. Investment as % of GDP
  • 6. Forex Reserves in Bn $
  • 7. Disadvantage of huge forex reserves
  • 8. Country risk rating
  • 9. What makes India worst?
    External security risk
    Terrorist threat
    State level disputes
    the poor quality of physical infrastructure
    suffocating levels of bureaucracy,
    fragmented multi-party coalition
  • 10. P/E Ratio of Different Countries
  • 11. Japan( service driven economy)
  • 12. GDP Growth rate-JAPAN
  • 13. Current account variation
  • 14. Industrial production % change
  • 15. Exchange Rate over the years
  • 16. Interest rate variation
  • 17. Japanese stock market
  • 18. Dividend yield of different sectors of Japan
  • 19.
  • 20. Inflation rate variation
  • 21. 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.
  • 22. Balance of trade variation
  • 23. Business confidence variation
    • 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.
    • 24. 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.
  • 25. India
  • 26. Decline in volatility in output
  • 27. FII limits in India
  • 28. SEBI regulation on FII
  • 29. Disadvantage of huge capital inflow?
  • 30. Indian bond market
  • 31. % share of Fii investment
    Market Capitalisation of FIIs holding (in NSE Listed Companies) to Total Market Capitalisation of NSE -12.5
  • 32. Turnover in F & o segment
  • 33. GROWTH Rate
  • 34. Inflation rate variation
  • 35. External debt variation
  • 36. FII inflows over the years
  • 37. FII Tax India
  • 38. Contribution to GDP-CHINA
  • 39. Chinese regulators.
    People’s bankof China
     China Securities Regulatory Commission (CSRC)
     State Administration of Foreign Exchange (SAFE)
    QFII-Qualified Foreign Institutional Investors
  • 40. 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.
    .
  • 41. 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
  • 42. Security Exchanges In China
  • 43. QFII Route to China
  • 44. China - Bank Loans
    Bank credit have sky rocketed .
    Lending's have shown an YOY growth of 30%.
    Higher Chances of default.
  • 45. Investment and consumption
    Whether all investments are capable earning a profit to service there debt financing.
    Private consumption still weak
    Dependence on world economy.
  • 46. Exchange change risk
    To protect their exporters.
    Reminbi devalued at par with dollars in the International market.
    Exchange rate risk is least incase of QFII in china.
  • 47. China
  • 48. SSE Composite variation over the years
  • 49. Chinese Bond market
  • 50. Variation of Inflation Rate over the years
  • 51. 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
  • 52. 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.
  • 53. Fixed Income Instruments Outstanding in Chinese Bond Market
  • 54. Variation of govt. bond yield
  • 55. China interest rate
  • 56. Variation of current account
  • 57. Variation of Balance of trade over the years
  • 58. Investment in China
  • 59. Conclusion