Shipping asset prices on a rise, but this could be a temporary phase

Asset prices for second-hand vessels in the dry bulk and tanker segments are currently going up. However, industry sources believe that players are in a wait-and- watch mode, and the rise may be a temporary phenomenon

After shipping asset prices bottomed out a few months back, a marginal rise of 8% to 10% has been witnessed in the asset prices for second-hand vessels in the tanker and the dry bulk segments. However, industry experts indicate that this could be a temporary situation, and is likely to change with the current volatility in the global economy.

The global slowdown had led to a number of cancellations for new orders placed with the shipbuilding industry. A significant drop in shipping asset prices was also witnessed last year. Asset prices in the tanker segment fell by nearly 40% from their peak in 2008. Similarly, the dry bulk segment took a hit of nearly 70% from its peak in 2008.

Now, with some signs of revival in the global economy, asset prices have moved up by around 8% to 10% from the bottomed-out rates. “Asset prices have slightly moved up, the movement is already visible with around 8% to 10% rise,” said Vinay Kshirsagar, CFO, Shreyas Shipping and Logistics Ltd.

An official from Great Eastern Shipping (GE), which has always timed its asset purchases during a fall in asset prices, has also confirmed the trend. “Yes, asset prices have surely shown some improvement,” said an official.

However, this revival in asset prices could very well be a temporary trend. “The revival in asset prices was expected with the economy coming back on track. Asset prices for second-hand vessels are already on a rise. However, the future trend will depend on the economy. With new issues coming up in Europe, shipping will also be affected. The industry is closely related to how the global economy performs,” said SS Kulkarni, general secretary, Indian National Shipowners’ Association.

“Going forward, if Chinese trading activities slow down, the entire dry bulk momentum will come to a halt. It is very difficult to predict whether the trend would continue or not. It should be a temporary phase; we expect a fall in prices. Though there may be a fall, it will not reach the levels at which prices had bottomed out,” added the GE official.


PC software piracy in India drops to 65% in 2009: BSA

The installations of unlicensed software on personal computers have fallen, but the dollar losses caused by software piracy continue to remain in the $2-billion range

BSA-IDC has said that more people are opting for licensed software, bringing down piracy levels to 65% in 2009 from 68% a year ago, reports PTI.

While the PC software piracy rate, or installations of unlicensed software on personal computers (PC), has fallen, the dollar losses caused by software piracy continued to remain in the $2 billion range.

"About 40% of the desktop PCs sold in India continue to be white boxes (assembled), but the drop in piracy levels shows that people are now opting for legal and licensed software over the pirated ones," BSA vice-president and regional director, Asia-Pacific, Jeffrey Hardee told reporters over a conference call.

The report, in its seventh edition, tracks PC software piracy rates in more than 100 economies worldwide.

The IDC study found that even though piracy levels remain high, anti-piracy education and enforcement campaigns spearheaded by the software industry, governments and law enforcement agencies have made commendable progress in bringing down piracy rates.

"In India, we have made significant progress in further bringing down the piracy rates as compared to 2008. However, our annual commercial value of unlicensed software still stands at a whopping $2.03 billion," Keshav S Dhakad, chair of the India BSA Committee, said.

BSA has taken up various initiatives with the state governments of Karnataka and Maharashtra, as well as with FICCI, and the Department of Industrial Policy and Promotion, Ministry of Industry and Commerce, and Ministry of Small and Micro Enterprises, toward increasing awareness about benefits of using licensed software and protecting indigenous information technology (IT) innovation opportunity.

Global PC software piracy has dropped in 54 of the 111 countries studied, but the worldwide piracy rate has risen from 41% in 2008 to 43% in 2009, due to exponential growth in PC software deployments in emerging economies.

The US, Japan, and Luxembourg continue to hold the lowest piracy rates of economies surveyed (20%, 21%, and 21% respectively), while Asia-Pacific economies with the highest piracy rates include Sri Lanka, Indonesia, Vietnam and Pakistan.

The 2009 BSA/IDC Global PC Software Piracy Study covers piracy of all software that runs on PCs, including desktops, laptops, and ultra-portables, including netbooks. This includes operating systems, systems software, such as databases and security packages, and applications software.


Growing small cities to keep inflation high in FY11: Goldman

Smaller cities are contributing more to inflation than the main metros

Goldman Sachs said falling food prices notwithstanding, consumer inflation will remain high during the current fiscal because of high cost of housing and services as well as the increasing inflationary pressures from smaller cities, reports PTI.

Goldman's research arm said in a report that inflation, based on consumer price index for industrial workers (CPI-IW) that includes services and housing costs, is already running at double-digits across almost all cities and has picked up rapidly in the smaller ones.

The report further pointed out that since last June housing costs have risen to an estimated 16% now from 4% at the end of 2008.

"We expect inflation to remain high and sticky through the year... even as the winter crops hit the market and ease food prices," Goldman said, adding, "our city-by-city analysis of inflation shows that smaller cities are contributing more to inflation that the main metros."

Goldman said it divided cities into large (with population over five million) and small (one to five million) categories for its analysis, and found higher inflation in small cities because of broad-based recovery from the global economic crisis of the past 18-odd months. Besides, it added, the strong recovery and growth momentum in smaller cities showed their rising importance as "activity hubs" as the country continues to grow at a faster clip.

Goldman said, however, that to tame inflation, the Reserve Bank of India (RBI) is expected to tighten the monetary policy (borrowing and lending rates) further. "We continue to think the RBI will deliver a total of 150 bps (1% equals 100 basis points) of policy rate hikes in 2010, of which 50 bps has already been delivered. We expect a further 100 bps in rate hikes for the rest of the year," Goldman said.


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