Comments on: First ICICI Bank, then L&T, what is next? http://mostlyeconomics.wordpress.com/2008/03/12/first-icici-bank-then-lt-what-is-next/ Mostly on research work in Economics and Financial System with focus on India Thu, 21 Aug 2008 02:13:20 +0000 http://wordpress.org/?v=MU By: Is India investment constrained or saving constrained? « Mostly Economics http://mostlyeconomics.wordpress.com/2008/03/12/first-icici-bank-then-lt-what-is-next/#comment-2662 Is India investment constrained or saving constrained? « Mostly Economics Tue, 08 Apr 2008 08:02:45 +0000 http://mostlyeconomics.wordpress.com/?p=550#comment-2662 [...] This leads to a question- how come the equity markets continued to rise? (data available in my research is till 2005-06). My best guess is that the industry was busy making profits from speculating in financial markets, commodities, exchange rates etc (Classified as other incomes in the balance sheets). All this now seems to be coming to an end and we keep hearing about some or the other organisation having derivative position going wrong. [...] [...] This leads to a question- how come the equity markets continued to rise? (data available in my research is till 2005-06). My best guess is that the industry was busy making profits from speculating in financial markets, commodities, exchange rates etc (Classified as other incomes in the balance sheets). All this now seems to be coming to an end and we keep hearing about some or the other organisation having derivative position going wrong. [...]

]]> By: Where are the customer’s yachts? « Mostly Economics http://mostlyeconomics.wordpress.com/2008/03/12/first-icici-bank-then-lt-what-is-next/#comment-2451 Where are the customer’s yachts? « Mostly Economics Fri, 14 Mar 2008 10:11:49 +0000 http://mostlyeconomics.wordpress.com/?p=550#comment-2451 [...] The more and more I read about this sub-prime crisis and recent developments in India’s financial sector, the more I think- where are the customer’s [...] [...] The more and more I read about this sub-prime crisis and recent developments in India’s financial sector, the more I think- where are the customer’s [...]

]]> By: HmmBut http://mostlyeconomics.wordpress.com/2008/03/12/first-icici-bank-then-lt-what-is-next/#comment-2443 HmmBut Wed, 12 Mar 2008 23:23:47 +0000 http://mostlyeconomics.wordpress.com/?p=550#comment-2443 I have always been dubious about the usefulness of hedging for non-financial entities. If a financial firm that sells a derivative product to a construction firm who would have better competency in determining the outcome? Ordinarily it would be the construction firm as it knows the market well. But with speculative hot money getting into commodities in such a big way, it is no longer simply about the market. There is an asset bubble forming in commodities and at the same time we might be at a global inflection point when it comes to social and financial aspects all over the world. For companies like L&T, these are difficult times. Financial firms haven't covered themselves with glory but I would be wary of dealing with them considering the trash they sold for the past few years. Besides there is always a scam in the financial sector usually with a regularity of one new scam every 5 years. I have always been dubious about the usefulness of hedging for non-financial entities. If a financial firm that sells a derivative product to a construction firm who would have better competency in determining the outcome? Ordinarily it would be the construction firm as it knows the market well. But with speculative hot money getting into commodities in such a big way, it is no longer simply about the market. There is an asset bubble forming in commodities and at the same time we might be at a global inflection point when it comes to social and financial aspects all over the world.

For companies like L&T, these are difficult times. Financial firms haven’t covered themselves with glory but I would be wary of dealing with them considering the trash they sold for the past few years. Besides there is always a scam in the financial sector usually with a regularity of one new scam every 5 years.

]]> By: » First ICICI Bank, then L&T, what is next? http://mostlyeconomics.wordpress.com/2008/03/12/first-icici-bank-then-lt-what-is-next/#comment-2441 » First ICICI Bank, then L&T, what is next? Wed, 12 Mar 2008 08:30:27 +0000 http://mostlyeconomics.wordpress.com/?p=550#comment-2441 [...] macZOT! wrote an interesting post today onHere’s a quick excerpt I am not really amazed by the recent developments in Indian financial markets-  losses in derivative markets. It started with ICICI Bank, then we had news of L&T and I wouldn’t be surprised if we hear more such cases. The ICICI Bank press release says the bank had no direct and indirect exposure to the subprime markets in US but the losses have been due to widening of credit spreads. This has resulted in mark to market losses. It points to two losses: 1)  Credit derivatives: ICICI Bank a [...] [...] macZOT! wrote an interesting post today onHere’s a quick excerpt I am not really amazed by the recent developments in Indian financial markets-  losses in derivative markets. It started with ICICI Bank, then we had news of L&T and I wouldn’t be surprised if we hear more such cases. The ICICI Bank press release says the bank had no direct and indirect exposure to the subprime markets in US but the losses have been due to widening of credit spreads. This has resulted in mark to market losses. It points to two losses: 1)  Credit derivatives: ICICI Bank a [...]

]]>