About 22 new companies join the Billion-dollar club

Analysts say the number companies with a market cap of $1billion and above have increased with an uptrend in the broader market, where the benchmark Sensex has gained around 21% so far in 2012

New Delhi, Oct 28 (PTI) The coveted league of the companies with billion-dollar market valuation has seen 22 new additions so far in 2012, including the companies from banking, pharma, finance and consumption-oriented sectors.
At the end of 2012, there were a total of 150 companies with a market capitalisation $1 billion or above, but their numbers have now risen to 172, as per an analysis of stock market data on market values of listed firms.
Analysts say the numbers of such companies have increased with an uptrend in the broader market, where the benchmark Sensex has gained around 21% so far in 2012.
Interestingly, there is little impact of the rupee-dollar exchange rate in the increase in the number of billion-dollar market valuation companies. The exchange rate is nearly unchanged near Rs53 against one US dollar at 2011-end.
The new entrants to this club include Emami, Jubilant Foodworks, Havells and Syndicate bank, among others.
In the finance space, Bajaj Finance, Max India and Indiabulls Financial Services have also made their way into the elite list.
In banking space, ING Vysya Bank, Standard Chartered (Indian Depository Receipts), IOB, Andhra Bank, Corporation Bank, J&K Bank and Karur Vysya Bank also command market capitalisation of one billion dollar and above.
Others to have entered the club include IPCA Labs, Torrent Pharma, Bata, Unitech, Pipavav Defence and GMDC and Eicher Motors.
The club is led by giants like Reliance Industries, TCS, ONGC, ITC, Coal India, HDFC Bank and SBI.


Economy & Nation Exclusive
Are the real estate markets too hot?

Real estate markets are not like stock markets. They are ‘sticky’. It takes time for owners and buyers to realize that the fun is over

The real estate market in the United States looks like it is finally recovering from its disastrous decline. The number of housing starts surged in September to the highest level in four years. Home builder’s confidence rose to a level not seen since the peak of the real estate bubble six years ago. This is certainly welcome news. Home construction always makes up a large share of the gross domestic product (GDP). The number is usually about 5% although in China the number is much higher about 13%.


Any improvement though would be good news. The US housing bubble was created by a rise of about 85% in six years from 2000 to 2006. After that the market fell 36%. The market also collapsed about two years after it started to decline. Even though the news in the US is good, there are still problems in many countries. According to the International Monetary Fund (IMF), home prices are still falling in 25 countries of the 54 tracked by the IMF. Leading the way was Ireland followed by the usual suspects: Greece, Portugal and Spain.


There are other markets that did not collapse, quite the contrary. The various quantitative easings (QEs) and other stimulus programs created by the US Federal Reserve together with the loose monetary policy in just about every country have had a much broader effect than finally reviving the anaemic US market. Global central banks’ policy of encouraging asset appreciation has been far more successful and dramatic in many other countries. It has pushed stocks, currencies and real estate markets sharply higher.


In September after QE3 was announced Indonesia experienced a net inflow of $1.3 billion in bonds compared to an outflow of $540 million in August. South Korea was in a similar position. It had an inflow of $1.4 billion in September verses an outflow of $2.4 billion in August. Many equities markets in Asia have also benefitted from the Fed’s largess. Thailand’s market is up 28% this year. The Philippine market is up 24%. The Indian market has increased by 23% and the Hong Kong market recently reached a 14-month high.


Real estate markets in many countries have risen dramatically in the past few years, some to levels that are neither rational nor sane. Hong Kong is a good example. Housing in Hong Kong has benefited from a flood of money coming out of China. Its house prices have doubled and have been labelled “seriously disconnected” from the slowing economy by a high government official. Singapore’s real estate has also risen by 56% from 2009. But these are small markets.


Want to escape the real estate market pitfalls? Click here to know how.


On a slightly larger scale are two commodities countries, Australia and Canada. The commodities these countries produce have benefitted from both the central bank inflation and demand from China. The benefit is reflected in their real estate markets. Like the US, Canada’s real estate market has risen, but just more slowly. The difference is that it continues to rise and is now at 125% of 2000 levels. While this is impressive, it pales compared to Australia where prices have risen 150%. According to one survey, houses in Australia are seriously unaffordable. If these bubbles deflate there would certainly be an impact, but these are still relatively small markets, unlikely to cause problems in the global economy. Also they are still rising, so any collapse might take a bit longer. This may not be true for three much larger markets: India, Brazil and China.


In China house prices have risen over 250% since 2009. The problem is so severe that last year the government increased restrictions on the market to rein in prices. But those restrictions are being ignored and prices have begun to rise again.


Brazil is another hot market. Real estate markets have risen 90% since 2009. Office space in Rio and San Paulo is the most expensive in the western hemisphere. Prices are also high in India where prices have also risen over 250% in the past ten years.


Unlike small markets in Hong Kong, Singapore, Canada or Australia, if the housing prices fell dramatically in any of these larger markets, it would have a far greater impact. The question is whether these dramatic price rises reflect a monetary induced bubble and if so are they in danger of bursting?


Perhaps. The prices are certainly high, but more importantly and unlike Canada and Australia they are either declining or rising far more slowly in each of these markets. Real estate markets are not like equity markets. They are ‘sticky’. It takes time for owners and buyers to realize that the fun is over. The other issue is leverage. Like the US sub-prime, the extent to which these markets are leveraged is difficult to determine. Financing and mortgages are often from far different sources. What is clear is that every market does go down. It is simply a matter of time.


To read more articles from the same writer, click here.


(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected].)




4 years ago

US market, especially South Florida market is pretty hot these days. Not much inventory in the marklet

Despite exit by small lenders, banks still prefer CDR cell

Banks still opt for consortium approach for lending and for restructuring. However, smaller banks are opting out of the CDR forum as they feel that big lenders are dictating terms and their interest is not protected

Mumbai: Despite some small private sector banks opting out of the corporate debt restructuring (CDR) cell, experts are of the opinion that most lenders will continue to be part of this forum as a consortium approach gives a lot of comfort over taking an individualistic route, reports PTI.
"The CDR process is bank and customer-specific. If a bank takes a call on an individual customer, there is nothing wrong in that. However, banks draw a lot of comfort from consortium approach and the CDR process is doing fine," K Ramakrishnan, Chief Executive of Indian Banks Association (IBA) told PTI.
"Banks still opt for consortium approach for lending and for restructuring. Except some aberrations or exceptional cases, multiple banking approaches is very much part of the domestic banking system," he added.
Recently, Yes Bank joined other financial institutions like Kotak Mahindra Bank, Development Credit Bank, IFCI and international lenders like Barclays and HSBC who have remained out of the CDR forum.
As per experts, the decision to stay out of the CDR forum is driven by the fact that the interests of small lenders are not protected in the prevailing CDR mechanism.
"Smaller banks are opting out of the CDR forum as they feel that big lenders are dictating terms and their interest is not protected. But, all banks can take their own view regarding a particular account to protect their interests," Angel Broking Vice-President, research, Vaibhav Agrawal said.
He, however, said the CDR mechanism is going to stay.
An official from a public sector bank said though the CDR cell has its own problems, consortium approach remains the best approach for a comprehensive view about a company.
Under the existing architecture, the financial sector is regulated by eight agencies including Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA) and Forward Markets Commission (FMC).
As per the proposal, there would be five new agencies besides Reserve Bank and FSDC. The new ones would be UFA, Financial Sector Appellate Tribunal (FSAT), Financial Redressal Agency (FRA), Debt Management Office (DMO) and Resolution Corporation.
At present, while the stock market is regulated by SEBI, the activities in the commodities market are looked after by FMC. The insurance sector is regulated by the IRDA, while the PFRDA is responsible for managing the pension sector.
The Unified Financial Agency (UFA), the approach paper had said, would deal with all financial firms other than banking and payments. It would also yield benefits in terms of economies of scale in the financial system.
It had also said there is a need for separating the adjudication function from the mainstream activities of a regulator, so as to achieve a greater separation of powers.
It had further said that the laws for the financial sector need to enshrine regulatory independence.
The Commission as per its mandate would draft a body of law, which would ensure establishing sound financial regulatory agencies.
The FSLRC was set up to recast the financial sector legislations in tune with the contemporary requirements of the sector. At present, there are over 60 Acts and multiple rules and regulations that govern the financial sector.


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