Copper prices, unlike its peers, have not grabbed much attention even though its price crash has been equally dramatic. Credit Suisse expects that supply will be the key differentiator as prices continue its downfall
Commodity prices have been in a correction mode in the past few weeks, with gold and crude oil already in a downward movement. But one metal that has not caught the eyes of investors is copper. The stockpile of copper recently breached a 10-year high on the London Metals Exchange (LME); the price has been trending down, below $7000 per tonne. The report sounds an even more cautious tone when it states: “Risks are also skewed towards the possibility of a deeper correction or undershoot, borne out by combined effects of structurally moderated demand growth and a long overdue delivery of abundant supply expansions for the first time in several years.”
Credit Suisse expects copper prices to trade towards $6,000 per tonne. Their report titled ‘Copper: Another One Bites the Dust’ states: “However, this time we feel that the move lower is likely to be structural in nature. In essence, after trading closer to the top of the $6,000 to $9,000 range in place since 2006, we now expect prices to gravitate towards the bottom end of that band.”
The reason for the pessimistic forecast is two-fold; firstly, supply has increased which resulted in record stockpiles. Secondly, a ‘structural downshift’ from China has resulted in weak demand. The confluence of the two has resulted in a crash in copper prices. Credit Suisse mentions that China demand has weakened so much that its growth rate is likely to settle at around single digits range of 7%-8%.
Additionally, the global investment bank mentions that any upward movement in price, perhaps due to European recovery, would be temporary and a good opportunity for short-term traders. The report states: “European road to recovery will be long and bumpy, is likely to see many industrial commodity prices move to a lower equilibrium, with any near-term bounce providing a new selling opportunity.”
More important than demand is the question of supply that has led to record stockpiles. The report states: “Copper’s price fortunes hinge more importantly on prospects for supply growth, rather than demand”. Steady expansion and investments in efficiency meant that supply is more ready than ever, with fewer levels of mine disruptions. The report states: “If, as seems quite plausible, miners suffer a lower level of disruptions and delays than in recent years, and expansion targets are more closely met, supply surpluses will inevitably rise.” Chile is one of the world’s largest producers of copper, yet the prevailing sentiment there is bearish as well.
Copper is an important commodity for several reasons. Firstly, it is a key material for electrifying homes, so it can be used as a barometer for gauging economic performance. Second, much of the world’s copper supply is consumed by China. Any small blip on the demand side from China is bound to affect copper. While the price has fallen to this level several times in the past couple of years, on each occasion the dip proved relatively temporary. However, this time around, we feel that the move lower is likely to be structural in nature, the report said.
For the year ended 31st March, net profit of the company rose by 39.82% at Rs1,010.93 crore as compared to Rs722.99 crore in the previous fiscal
Mobile operator Idea Cellular Thursday reported jump of nearly 29% in its consolidated net profit at Rs308.18 crore for the fourth quarter ended 31st March, driven by growth in voice minutes and high data usage.
The company's net profit stood at Rs238.98 crore net profit in the same period last fiscal.
Total revenues for the company during the January-March 2013 quarter rose by 12.88% at Rs6,061.38 crore from Rs5,369.69 crore in the corresponding period last fiscal.
For the year ended 31st March, net profit of the company rose by 39.82% at Rs1,010.93 crore as compared to Rs722.99 crore in the last year.
“The high revenue growth is led by sharp expansion of voice minutes at 8.5% to 143.4 billion, on sequential quarterly basis, indicating consumer demand for mobile telephony is robust,” the company said in a statement.
Idea’s net profit from international long distance grew to Rs8.82 crore, from Rs5.86 crore.
“The Q4, FY13 has the highest data adoption by Idea customers' with 4.5 million sequential quarter addition, as the EoP base of data users grew to 26.2 million, now contributing 6.6% to service revenue,” the statement said.
The active 3G subscriber base for the company stands at 5.1 million and average revenue per user for data stands at Rs55, it added.
“Idea continues to strengthen its competitive standing by investing in long term value creators, launched 2,432 GSM sites and 1,595 3G sites, expanded optical fibre network to 74,000 km and strengthened its presence in NLD, ILD, ISP, data services and smartphone device business,” the statement said.
It added Idea is the biggest net gainer nationally in the Mobile Number Portability programme.
After keeping mum for all these years the MCA has finally decided to hand over the probe of chit-fund, MLM, Ponzi and pyramid schemes to a special task force under the SFIO
After the collapse of Saradha group, the ministry of corporate affairs (MCA) in a face saving measure has decided to hand over probe of such chit-fund, MLM, Ponzi and pyramid scheme operators to Serious Fraud Investigations Office (SFIO).
“…in view of the larger public interest involved in these cases, and concerns regarding misuse/ laundering by such companies of the ill-gotten wealth, and the possibility that the promoters of these companies may strip these companies, it has been decided by the MCA to set up a Special Task Force in the SFIO to investigate the affairs of such companies. Accordingly, all investigations into such companies are being entrusted to SFIO with immediate effect,” the ministry said in a release.
The ministry said the probe has been ordered in view of a larger public interest involved in the issues, although the state governments are the appropriate authorities for regulation of such chit fund companies and schemes under the Chit Fund Act, 1982.
Moneylife has been continuously writing about the inaction by government and regulators regarding MLM companies, money circulation schemes, pyramid-marketing schemes and other similar companies that swindle the unwary public by offering them misleading inducements and depriving them of their hard-earned savings.
Here are some of the important stories written and representations made by Moneylife over the years…
Moneylife Foundation’s representation to PM, FM and RBI on MLM schemes
In May 2011, following the exposé by Moneylife on Speak Asia Online Pte Ltd and its MLM scheme, Moneylife Foundation sent a representation to prime minister Dr Manmohan Singh, (the then) finance minister Pranab Mukherjee, finance secretary Sushama Nath and Reserve Bank of India (RBI) governor D Subbarao urging them to ban all MLM companies and their schemes in the country, or to bring all MLM companies under the regulation of either the RBI or the Securities and Exchange Board of India (SEBI), to stop them ensnaring gullible people.
The massive money, which is raised surely shows somewhere on the balance sheet of the company, filed regularly with the MCA. The primary recipient of the information about these companies is the MCA, and surprisingly the MCA is the least proactive in the entire process of bringing these perpetrators to regulatory focus, sooner before tonnes of money vanish.
Dubious pyramid schemes or money-circulation schemes are looting Indians across economic strata, finds Sucheta Dalal. This will continue since Central and state governments seem unconcerned.
Pyramid marketing companies are looting the public easily, while the government watches. Many countries have banned them outright.
A strange deposit scheme that is proliferating in the states of Orissa, Chhattisgarh, Karnataka and Maharashtra has already collected almost Rs1,000 crore and is expanding virtually unchecked. The scam has elements of money-laundering and possibly the use of fake and forged currency as well; however, the banking regulator would like to pass off the investigation to the respective state governments for investigation under the antiquated Prize Chits and Money Circulation Schemes (Banning) Act.
An international network marketing scheme hawking expensive limited edition coins is attracting a huge following. Sucheta Dalal examines this strange quest.
Moneylife readers know how MLM schemes ensnare lakhs of people by promising extraordinary returns. We learn from the ministry of consumer affairs that the government is now waking up to the need for better regulation of MLMs and ponzis. At the same time, the powerful Direct Selling Association of the US is lobbying hard for an amendment.
Pyramids are pure fraud. Their business is unsustainable-they promise payment for goods or services of dubious value. The hallmark of these schemes is the promise of sky-high returns in a short period of time, for doing nothing other than simply handing over your money to them, and getting others to do the same.
Even as India bans pyramid schemes under a statute called the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, the country continues to be a happy hunting ground for pyramids because our legislation is deliberately unworkable.
Investors losing money, or falling for dubious Ponzi schemes, is not a recent phenomenon; this has been happening for decades and it is not restricted only to India. Why is it that people repeatedly fall prey to such schemes in spite of being aware of the frauds perpetrated by conmen under different guises?
EAS Sarma, former power and finance secretary, said the ministry of finance, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and the investigating agencies should collectively tackle this problem without any delay, as every day of procrastination will only result in thousands of hapless families cheated by the promoters of these schemes.
Spokespersons and dealers of multi-level marketing (MLM) schemes or network marketing schemes respond to questions about their legitimacy by brandishing a 2003 letter issued by the then secretary, ministry of corporate affairs (MCA). What they omit to mention is that the letter was subsequently annulled following complaints about its misuse. This means, the letter used by these scamsters is no more valid.
While there are existing laws such as Indian Penal Code (IPC), the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCS Act) and others under which concerned agencies could prosecute the culprits, there is no effective mechanism in place to ensure a coordinated approach to identify the fraudulent operators in advance and book them well before they destroy the livelihoods of thousands of households and launder the ill-gotten funds to unknown destinations.
A set of powerful MLMs, which are part of an exclusive closed club, called the Indian Direct Selling Association or IDSA (on the lines of the Direct Selling Association of the US) has been lobbying hard to make a distinction between their operations and those of others, who they call, fly-by-night operators such as SpeakAsia and Ad Magnet.
QNet, the controversial Hong Kong-based multi-level marketing (MLM) operator with multiple names (GoldQuest, QuestNet, QNet, QI Ltd and QI group are the better known names) refused to answer simple questions like how much money their independent representative (IR) earns on an average every month and why their products are priced so highly. Instead, it sent us a threatening and defamatory mail that raises more questions as to their real motive.
If 2010 was the year of great Indian scams, 2011 was rather of ponzi and multi-level marketing (MLM) frauds. SpeakAsia managed to top the chart, but soon many others joined the bandwagon, duping gullible investors for several thousand crores.
Nothing comes free in this world, especially money. The universal truth is you need to earn your money by hard labour all the time and there are no shortcuts to double it in the shortest span of time. Therefore, even if your near and dear ones tell you he/she will double, triple, quadruple your money within a few days/months, politely reply to them that it is not possible and what they are advocating is a pure 'get-rich-quick' type of scam.
Herbalife, a global MLM scheme also prevalent in India, is believed to be worthless according to hedge fund manager Bill Ackman, who made a detailed presentation on why consumers should avoid buying the company’s products and stay away from the MLM.