Emerging markets V/S Developed markets

The US economy has been growing at a turtle's pace. Japan has not been too far behind. Europe is almost flat with a few exceptions. China's stellar growth is expected to slow down. But Templeton's Mark Mobius feels that the global economic recovery is "well in place". According to him, the growth in the BRIC countries coupled with Turkey and South Africa will more than offset the slowdown in the developed world. While China has slowed down, but a growth of 10% is still not such a bad thing.
As per Mobius' peers too, it would be the emerging markets that would lead the economic recovery across the world. This is reflected in the performance of the markets as well given that the MSCI (Morgan Stanley Composite Index) for Emerging markets has outperformed the developed markets in recent times. 

India to become the world's fastest growing economy

It is becoming more and more obvious how gung-ho the rest of the world is on emerging markets, especially China and India. And it is now also becoming increasingly evident that the scales might tip in favour of India very soon. A recent report by Morgan Stanley helps confirm this view. A sterling demographic dividend. Continuing structural reform. Globalisation. All these factors will help India accelerate its growth rate to 9 to 9.5% over 2013-15. This even as China will cool down to a more modest 8% by 2015. It expects globalisation to give additional job opportunities to Indians. Additional capital to augment rising domestic savings and additional know-how are other collateral benefits of globalisation India will enjoy going forward. In light of these factors, the report expects India to become the world's fastest growing economy by 2013-15. Gazing into the crystal ball is always a tricky exercise. We must admit though that India has a lot of things going for it currently. Especially relative to many other large countries around the world. 

USA-Unemployment Rate

Unemployment is the number one thing in the minds of most economists and investors when it comes to the US these days. And according to the world's most influential bonds fund manager, Bill Gross there is no solution in sight. Bill Gross believes the new 'normal' unemployment rate will be 7% instead of 4%. Hence, the government should spend tens of billions of dollars on new infrastructure projects to put people to work and stimulate demand.
In his own words, "Current policies have specifically promoted consumption as opposed to investment. We need some type of government-oriented policy that promotes infrastructure, that promotes re-education, that promotes the green energy that is specifically directed as opposed to pushing money into the consumption hole." We must point out though that there is an underlying danger in this approach. Government spending on infrastructure might result in a lot of wasteful expenditure - not the best use of precious capital. 

My India My New Hope!

The fate of the PIIGS (European nations now infamous for their huge debt burdens) may have come as a rude shock to investors in Europe. But the economy which is the biggest investor in US Treasuries does not think so. In fact China is now supposedly more bullish on the Euro zone than on the US.
The Chinese central bank has been buying more of Euro bonds rather than selling the same. As against this its sale of US Treasuries over the past few months has been well documented. Japanese bonds too have found takers in China. This may seem to be just a case of diversification of investments. However, the underlying fact may be of huge concern to the US Fed. Asian central banks, holding around 60% of the world's foreign exchange reserves, are turning away from the dollar. The world's reserve currency is in dire need of support.

MFs using all means to get new accounts

The Indian mutual fund industry has been facing tough times of late. Fund houses are finding it tough to get new clients into their system. This is given that the SEBI has knocked off the fees that distributors used to get from selling mutual funds (under the garb of entry loads). In these times thus, mutual fund companies are restoring to all means to get in new accounts. One step these companies have taken is to tap their existing clients for more funds. 
Leading the ploy are bank-sponsored fund houses. These are increasingly becoming dependent on their bank sponsors or in-house partners to help garner a tidy collection. And the results are there for everyone to see. These bank-sponsored fund houses are witnessing inflows of around 40-70% of new fund offer (NFO) collections coming from the sponsor bank's customers. 

The Grand Show Cairn India !

Oil exploration is not an easy job. In fact, it is one of the most complex operations in the world. One that requires tremendous experience, sound knowledge and management depth. What is more, world over, governments insist on prior experience before companies are even allowed to explore. Take the case of the recent BP oil spill. Despite having years of experience in the oil exploration industry, BP became embroiled in the world's biggest oil spill in history. 
So, it was mystifying when the Anil Agarwal owned Vedanta Resources announced its intention of acquiring 51% stake in Cairn India. After all Cairn India is into oil exploration. And Vedanta, which is into metals and mining, has zero exposure to the oil industry. What also works against Vedanta Resources is its questionable management. The company has already been accused of 'having contempt for the law' in its recent bid to build a bauxite mine in Orissa. 
This more than ever highlights how important quality of management is. A good or bad management (as the case may be) may be a game changer in terms of where a particular company's fortunes are headed. One cannot put a number to management quality. But the track record of the company and what the management intends to do to steer the growth of the company forward is important. Justifying a particular strategy by highlighting the huge potential that India has is one thing. But are these decisions taken by the managements in the interest of the companies and their shareholders? Many a time investors give a lot of importance to how high the share price of a company is likely to go. No heed is paid to the managements' intentions and capabilities. And that could be the biggest blunder that shareholders and investors make.