- Morgan Stanley: Rising Macro Risks; Lowering Growth Estimates
. . . a turn of macro events does bear some strong resemblance to the mid-1990s cycle. As in that cycle, a favorable emerging market environment accentuated the acceleration in the growth trend to the overheating zone in the current cycle. Total capital inflows into India increased to US$98 billion in 2007 from US$12 billion in 2002, mimicking the overall EM capital inflows trend. We believe that these large capital inflows played a key role in boosting India’s growth cycle to above-sustainable levels. Capital inflows resulted in a sharp fall in real interest rates, boosting domestic demand.
During the 1993-98 cycle, the Asian crisis and resultant risk aversion in the global financial market prolonged the down-cycle. The Indian corporate sector suffered major negative operating leverage after having increased business investments. Private corporate capex had risen from the trough of 6.1% in F1994 to 10.4% in F1996. Indeed, in the current cycle, private corporate capex has increased at a higher pace to an estimated 15% of GDP in F2008 from the low of 6.6% in F2004. We believe that the current adverse global macro-environment is increasing the risk of a prolonged domestic demand slowdown, resulting in negative operating leverage for the corporate sector again.
- Hindu Business Line: The long and short of rupee futures
The lot size has been kept at a mere $1,000, which is just about Rs 42,500 at today’s rate . . . the value of one lot of rupee futures is going to be half that of one lot of the Mini Nifty.
. . . there appears to be some serious issues with the present conception of the rupee futures market, wherein dollars can neither be delivered nor be taken delivery of, and the futures can only be cash-settled. This feature not only divorces, at the very time of birth, the rupee futures market from the thriving OTC dollar-rupee market but may also give rise to a number of challenges.
- Information Arbitrage: Monitor110: A Post Mortem
The thesis: more and better information is being put out on the Internet every day, information that can be valuable to Institutional investors who are constantly looking for an edge. And these investors were not very sophisticated about how to best access this information; Monitor110 would use technology to help them get that edge.
While we certainly made more than seven mistakes during the nearly four-year life of Monitor110, I think these top the list.
- The lack of a single, “the buck stops here” leader until too late in the game
- No separation between the technology organization and the product organization
- Too much PR, too early
- Too much money
- Not close enough to the customer
- Slow to adapt to market reality
- Disagreement on strategy both within the Company and with the Board
As we continue to build Moneyoga, we’ve come to realize that while the capital markets offer several opportunities for tech/Web startups, very few of these are viable business models in India.