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The World Gold Council said recent moves by India and Sri Lanka to acquire gold suggested that central banks are increasingly looking at the yellow metal to diversify their investment portfolios.
Gold, which has been one of the bigger investment vehicles this year, would remain so as the demand for the metal is underpinned by inflation, economic uncertainty and investors' search for alternative assets, says an official of the World Gold Council (WGC).
Addressing a webinar on gold demand trends, Rozanna Wozniak, investment research manager at the WGC, said the recent moves by India and Sri Lanka to acquire gold suggested that central banks were increasingly looking at gold to diversify their investment portfolios.
Presenting an analysis of gold demand-supply dynamics and trends to investors and traders in the third quarter of 2009, she said it marked the second consecutive quarter-on-quarter improvement for both jewellery and industrial demand. And in the case of industrial demand, it was clear that the turning point for demand had been reached.
Grant Collins, senior managing director, Dubai Commodity Asset Management, said gold investments were gaining favour in markets where exposure to the metal was limited until now.
Uncertain economic conditions and currency fluctuations had encouraged greater allocation to gold in portfolios.
"We expect demand for gold investment to remain strong with investors looking for simpler and secure means to access the gold market," Mr Collins said.
Ms Wozniak said while the outlook for gold investment is healthy in Western economies, "trends in the non-western markets are likely to mirror the jewellery market."
Given the recent rise in the gold price, the outlook for jewellery demand remained uncertain, Ms Wozniak said, adding that Q4 is expected to be a mixed quarter.
While the gold price has repeatedly tested new highs over the last few months and key jewellery markets are looking for opportunities to buy on dips, it is still too early to see where the new levels of key support would emerge now that the gold price has moved into a new trading range, she said.
Ms Usha Thorat, Deputy Governor, Reserve Bank of India said, “People are not aware of the right questions to be asked. Financial literacy and education can ensure that people are armed with the right questions. Financial literacy is an essential part of financial inclusion. Unless we are able to understand the requirements of investors, financial literacy cannot achieve its purpose”. She was giving away the prizes for the ‘Big Ideas Essay Contest’ organised by Moneylife in association with Reliance Mutual Fund.
The prize distribution ceremony was preceded by a lively panel discussion on ‘Taking Financial Markets to the Masses’ – the theme of the essay contest. The panel comprised Dr Anil Khandelwal, former Chairman, Bank of Baroda, Mr Jagan Mohan Rao, Chief General Manager, Reserve Bank of India, Amitabh Mohanty, Head, Fixed Income, Reliance Capital Asset Management, Mr Madu Kannan, CEO, Bombay Stock Exchange and Mr Shailesh Haribhakti, Founder Partner, BDO Haribhakti. During the discussion, Mr Khandelwal said, “Financial illiteracy is widely prevalent even among literates. One of the reasons why investors shy away from the markets is because the wrongful conduct of some market participants has not enthused confidence among the masses.” Mr Haribhakti added, “We need to seriously ponder why retail investors are withdrawn from the markets. Our challenge remains to create the right experience by serving the education and awareness needs of the population.” Mr Mohanty rightly stated, “Gone are the days when passive investing was a viable option. It is upto us to ensure people are equipped with the ability to ask the right questions.” Mr Kannan added, “Financial literacy is even more important in the Indian context. We at BSE have given importance to the training aspect for different types of asset classes. But I feel financial literacy is also needed on the institutional side.” Mr Jagan Mohan Rao agreed, “Only trained people should be allowed to advise people on financial products.”
The winners of the keenly contested essay competition are:
First prize - Ms Anshika Malaviya (Narsee Monjee Institute of Management Studies). She gets two return tickets to Dubai from Bahrain Air plus cash prize Rs20,000;
Second prize - Mr Binod Anand (MIT International School of Broadcasting and Journalism). He gets a Mahindra Holidays package for two for two-nights-three days to Goa plus cash prize Rs10,000.
Third prize - Mr Sanket Desai (Mumbai Business School) gets a Blackberry smartphone from Ravi Syam’s organisation – Media Training Worldwide
Most Original Idea prize - Mr Rakesh Sancheti (Symbiosis Institute International business) gets a cash prize of Rs25,000 from Moneylife.
Early Bird prize - Mr Sagar Kulkarni (Welingkar Institute of Management) gets a 4 night-5 days package to Goa from Goa Tourism
The winners were selected by a very eminent jury headed by Dr Anil Khandelwal, former Chairman, Bank of Baroda. Other jury members included Mr Jagan Mohan Rao, Chief General Manager, Reserve Bank of India, Mr Madhu Kela, Head, Equity Investments, Reliance Mutual Fund, Mr Joseph Massey, Managing Director, MCX-SX, Mr SG Kalia, Executive Director, Vijaya Bank, Mr Debashis Basu, Editor & Publisher, Moneylife Magazine.
Earlier, Mr Debashis Basu, announced the formation of the Moneylife Foundation which will undertake financial literacy programmes targeted for different sections of the saving & investing community. Moneylife Foundation is a non-profit organisation dedicated to the cause of financial literacy, investor and consumer education and protection.
The high-profile essay contest was undertaken as a unique initiative of Moneylife magazine to identify outstanding talent among the 70-odd management schools in the Mumbai-Pune region. Students were required to submit a 3,000 word essay on the topic ‘Taking Financial Markets to the Masses’. The response was heartening, with over a hundred submissions received from over 26 institutes. A preliminary screening resulted in 17 essays being short-listed. Each of these 17 finalists was given a certificate of appreciation, a gift, and a six-month subscription to Moneylife magazine.
The MSME sector is the second-largest contributor to India’s GDP and the government wants to develop it further by raising Rs1,000 crore for its development
The Indian government is planning to raise around Rs1,000 crore for development of micro, small and medium enterprises (MSMEs) under the 11th five-year plan.
Speaking at the second World SME Conference, Dinsha Patel, minister of state for MSME said, “In the Indian economy, the MSME sector is the second-largest contributor in terms of gross domestic product (GDP) after the agriculture sector.
It provides almost 80%-90% of employment to the Indian population and has 45% share in production and 35% in exports." To develop the MSME sector, the government is planning to raise Rs1,000 crore, he added.
In a panel discussion titled 'IT Solutions for MSMEs-Lip Service or Real Solutions', industry experts suggested that to serve the MSME sector profitably, there is a need to understand the market, provide indigenous and simple solutions that build confidence among the MSME community, about the benefits of IT.
Rajeev Karwal, founder-director, Milagrow Business and Management Solutions said, "The SME sector, which contributes almost 40-50% to economic activity, has been an underserved, manipulated and much-abused sector because of a variety of reasons. Because of misplaced regulatory and business compulsions, the sector never got its due. It is my dream that these hidden jewels of the Indian industry shine brighter than ever now, especially when the Indian market place is growing."
Speaking on the hotly-debated topic of growth titled ‘East or West, Growth for SMEs is the Real Test’, management guru Dr Jagdish Sheth said, "Entrepreneurship has no barriers, you can be illiterate but yet innovative.” Dr Sheth also highlighted some of the key reasons behind the lack of attention to Indian MSMEs and laid out a very vital roadmap for the development of MSMEs in India.
A recent ASSOCHAM (Associated Chambers of Commerce and Industry of India) study said that small and medium enterprises (SMEs) are expected to contribute 22% to India's GDP by 2012, up from about 17% currently.
The survey also noted that “(The) SME sector contributes 40% to the country's exports and that this share would increase to over 44% with the help of modernised technology.”