Readings: Rupee derivatives, Water threat, Hedge fund AUM
An increasing number of bankers and traders in major financial centres such as Singapore and London are inking deals in derivative contracts on the rupee, even while existing rules laid down by India’s apex bank, the Reserve Bank of India (RBI), severely limit such transactions within the country.
People who trade in this market estimate the value of such transactions to be $1-1.5 billion (Rs3,970-5,955 crore) a day.
The rigid rules have already encouraged people looking for trading or hedging opportunities to trade in non-deliverable forward (NDF) markets in the rupee in Singapore, Hong Kong and London.
NDFs are forwards contracts where investors make a call on the future exchange value of the rupee against the dollar.
They are generally settled in dollars and traded over the phone.
RBI & SEBI late to the party, as usual?
It isn’t so much the likelihood of Asian cities running out of fresh water that should bother the region’s policy makers as the bigger danger of being overwhelmed by waste water.
The capability to treat discharged water before it is allowed to flow into lakes, rivers and oceans isn’t growing quickly enough. Unless this crucial shortcoming is immediately tackled, it may end up being a deterrent to urbanization.
India, which will need $37 billion over the next decade to give city dwellers access to safe water and sanitation, is also aware of the need to make tariffs more realistic.
This is interesting, doubly so since Sam Zell - the grave dancer, contrarian investor & uncanny market timer - is getting into the waste-to-eneergy (WTE) business big time. He has placed his waste-to-energy bet on one New Jersey company, Covanta Holding.
- All About Alpha: Remember the days when $1.25 trillion was a lot of money?
. . . some pundits have recently pegged the number at $1.25 trillion (with pinky firmly planted at edge of mouth a la Myers). But without missing a beat, other experts have recently put it at $1.48 trillion and even at $2.48 trillion. Today, yet another hedge fund database provider came out with an even higher number ($2.68 trillion).
Some funds of funds that manage internal single-strategy funds are double-counting, once at the single fund level and then again at the fund of funds level. The justification seems to be that the fund of funds adds value, and charges a separate fee. Thankfully, database providers don’t subscribe to this logic.
Ah, what’s a trillion here or there?
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