Attributing the double digit industrial growth rate to stimulus packages, the Planning Commission on Friday said that the growth momentum would be maintained in the coming months, reports PTI.
A fool and his money are soon parted, the saying goes. Obviously, pathetic returns come in when an ’art’ fund is managed by an Investment Banker type. And valuation is so iffy that the winding-down realisation is at huge odds with the so-called ‘declared’ asset value.
What is interesting is that there is no regulatory oversight for any aspect of this kind of business. Brokers and investment bankers have milked this lacuna by selling such funds to people only because they get commissions which could be in the range of 6%-10% of the amount mobilised. And, of course, these ‘selling expenses’ are charged to the fund.
The interesting thing is that the products were actually sold to smaller guys also in lots of as low as Rs1 lakh. In their greed to grab the commission, the intermediaries left no one alone, big or small. Intermediaries approved by Securities and exchange Board of India (SEBI) selling non-regulated products should be probed and preferably banned. As it is, today many brokers are selling so many ’structured’ products, including ‘guaranteed’ products which can cause serious damage to any investor. SEBI has to wake up and impose a blanket ban on anyone selling any financial product that is not approved. Maybe the RBI could also step in. It is these kind of art funds, plantation schemes, time-share schemes, etc that cause financial bloodshed.
The main reason is that these products can be sold by anyone to anyone. Or take another interesting example. I saw an ad of a jewellery company called ’KFJ’ which offers a scheme whereby you contribute a fixed amount each month, for 30 months. At the end of 30 months, KFJ guarantees you gold for your money ‘at the lowest price which existed during the 30 months’. The arithmetic is not workable. Either KFJ is very certain that gold prices are going to keep crashing (in which case, the 30th month price would be the lowest and it can use the money for the period of 30 months) or it uses the money to speculate in other assets which offer returns that can make good the difference. I have a feeling that this is going to turn into a mega scam. If this is not deposit-taking or a collective investment scheme, I wonder what is. The Reserve Bank of India (RBI) is, of course, the ‘Big Sleeper’; one has to ‘bring to attention’ any wrongdoing and then RBI asks for its morning cup of coffee before getting to work.
Clearly, KFJ’s scheme is a Ponzi scheme in the making. It does not need any regulatory approvals, so KFJ can merrily trap the greed for gold in its main catchment areas in south India, where the craze for gold is legendary. Housewives will be eager victims.
Our regulators will not wake up. Teak plantation schemes, time-share schemes, chit funds, fixed deposits, land scams et al will thrive and smart conmen will vanish with the money. The investors have no protection at all from financial rogues who come disguised as brokers and insurance salesmen. I also feel that the investors who lose their money deserve it, simply because they are so greedy and gullible.
(Read Moneylife news breaks on Osian at http://www.moneylife.in/section/81/44584.html)
The Organization for Economic Cooperation and Development (OECD) said it expects international mergers and acquisitions (M&As) to fall by 56% this year compared with 2008, the largest year-on-year decline since 1995, reports PTI.
The estimate is based on OECD's analysis of data for international M&A activity up to 26 November 2009, OECD said in a report.
The fall was largely due to the 60% decline in the value of cross-border M&As by companies based in the OECD area, to $454 billion in 2009 from over $1 trillion in 2008, it said.
However, this phenomenon was also due to the first sharp declines in M&A activity in major emerging economies—international M&A activity by companies based in Brazil, China, India, Indonesia, Russia, and South Africa fell by 62% to $46 billion in 2009 from $121 billion in 2008.
M&A activity in these countries is forecast to fall by almost 40% this year to just over $80 billion from just under $140 billion in 2008, the organisation said.
Speaking at the recent opening of the OECD Global Forum on Investment in Paris, OECD secretary general Angel Gurria said that governments needed to “do more” to promote business investment.
"Against the backdrop of a fragile global economy and sharp declines in international investment activity that have now spread to the emerging economies, the international investment policy community cannot afford to relax," Mr Gurria said.