Nokia Corp. said Tuesday it expects the global market for mobile devices to grow 10 percent next year
The markets had expected higher growth
It said worldwide sales for all companies should total more than 1.2 billion units in 2008.
Nokia said the worldwide market for Internet services would reach $145 billion by 2010.
The highest growth in the global mobile market next year -- more than 15 percent -- will be in the Asia-Pacific region, China, the Middle East and Africa, Nokia said. The lowest growth -- less than 10 percent -- will be in North America, Europe and Latin America.
Nokia said that globally there will be 4 billion mobile subscribers by 2009, a milestone that would come a year earlier than the company had earlier predicted.
The Finnish company -- which said in October that its global market share had grown to 39 percent, from 36 percent in the third quarter of 2006 -- said it aims to further increase market share in 2008. Its long-stated goal has been 40 percent, although Chief Executive Olli-Pekka Kallasvuo has said the company might raise that target.
Mary McDowell, from Nokia's enterprise solutions division, said Nokia handset owners will be able to use Avvenu's "digital locker," a file access and sharing technology to search, access and share PC files remotely even if a PC is turned off or not connected to the Internet.
Nokia also previously announced major deals with other recording labels, as well as with Vodafone, the world's largest mobile phone company, to provide Internet access "at the click of a button" to handset users. Nokia launched its own Web services on a new site, called "Ovi," that includes an online music store.
Link
Tuesday, December 4, 2007
ETFC and Citadel Deal
At first blush, Citadel’s rescue plan Thursday looked like a pretty good deal. But now, many investors are beginning to wonder if E*Trade is burning the village to save it.
Here’s why: Lost in the excitement of the deal was the fact that E*Trade wrote down about $2.6 billion on its balance sheet — $2.2 billion of asset backed securities and $400 million in home equity loans. Citadel will invest roughly the same amount in E*Trade by buying the ABS portfolio for $800 million and taking on $1.75 billion in E*Trade debt.
But E*Trade will pay 12.5% interest on that debt, a hefty premium. (It’s also worth remembering that E*Trade lost about 15% of its deposits for which it paid a much lower interest rate than it will be paying Citadel.)
In addition, Citadel is getting 84 million shares, valued at about $405 million at yesterday’s closing share price, thrown in the pot for free.
Castle
E*Trade has effectively given away 20% of the company and borrowed $1.75 billion at a rate that could impair earnings by one analyst’s reckoning by more than 50 cents a share.
And what happens if further writedowns are necessary? E*Trade wrote down 3% of its $12 billion home-equity loan portfolio. By one rough comparison, Wells Fargo set aside reserves equal to 12% of its own $12 billion portfolio of home equity loans.
Maybe E*Trade’s loans are more sound. Maybe not.
We’ll find out in March when more adjustable rate mortgages reset. In the meantime, E*Trade might want to think about improving its fortifications.
Courtesy WSJ Blog
Here’s why: Lost in the excitement of the deal was the fact that E*Trade wrote down about $2.6 billion on its balance sheet — $2.2 billion of asset backed securities and $400 million in home equity loans. Citadel will invest roughly the same amount in E*Trade by buying the ABS portfolio for $800 million and taking on $1.75 billion in E*Trade debt.
But E*Trade will pay 12.5% interest on that debt, a hefty premium. (It’s also worth remembering that E*Trade lost about 15% of its deposits for which it paid a much lower interest rate than it will be paying Citadel.)
In addition, Citadel is getting 84 million shares, valued at about $405 million at yesterday’s closing share price, thrown in the pot for free.
Castle
E*Trade has effectively given away 20% of the company and borrowed $1.75 billion at a rate that could impair earnings by one analyst’s reckoning by more than 50 cents a share.
And what happens if further writedowns are necessary? E*Trade wrote down 3% of its $12 billion home-equity loan portfolio. By one rough comparison, Wells Fargo set aside reserves equal to 12% of its own $12 billion portfolio of home equity loans.
Maybe E*Trade’s loans are more sound. Maybe not.
We’ll find out in March when more adjustable rate mortgages reset. In the meantime, E*Trade might want to think about improving its fortifications.
Courtesy WSJ Blog
Tuesday, November 27, 2007
Citibank Dilutes the existing Shareholder stakes
Abu Dhabi Investment Authority said it will invest $7.5 billion in Citigroup Inc. Once the equity units Abu Dhabi bought are converted into stock in 2010 and 2011, Abu Dhabi will hold a 4.9 percent stake in Citi. Until those units get converted, Citi will pay Abu Dhabi a yield, or essentially an interest rate, of 11 percent. This is a hefty interest rate and also the analysts estimate earnings per share going forward will be diluted by about 3 to 4 percent by the sale. A very bad move for the investors more like the scenario 3 below.
What does all this mean to an average investor named Joe?
Stock dilution refers to when a company issues additional stock, for any purpose. Some of those purposes are bad for outside shareholders, some are neutral, and believe it or not, some are actually good. We examine all three scenarios to see how they can affect us as investors.
Example.
In 2005, Phaser(a hypothetical company) had 100,000 shares of common stock outstanding, a market cap of $1 million, and $100 of net profits.An individual investor Joe, on Dec. 31, 2006, bought 10,000 shares of Phaser stock. When the company reported its earnings, Joe was elated to learn that, by virtue of his stake, he vicariously earned $10 worth of Phaser's profits. Little did he know what 2007 held in store for him.
Dilution Scenario One
In 2007, Phaser decides to engage in the worst of the three main ways that companies dilute their shares: It issues 100,000 stock options to its CEO. For the time being, Phaser has a "basic share count" of 100,000 shares actually outstanding. But because its CEO will eventually exercise his or her stock options (i.e., tell the company to issue 100,000 shares to him or her and then sell them on the open market), Phaser now has a hypothetical, or "diluted," share count of 200,000.
That's bad news for Joe. While he will still own his 10,000 shares, his ownership stake will be diluted once the company issues that extra stock. What does that mean? Well, when Phaser's share count stood at 100,000, and it earned $100, Joe was entitled to 10% (10,000/100,000) worth of those profits, or $10.
But when Phaser issues those 100,000 extra shares, Joe's shares will not equal 10% but just 5% (10,000/200,000) of all shares outstanding. If Phaser earns $100 again the next year, Joe's take from that haul is just $5. Poor Joe.
The CEO, on the other hand, gets 100,000/200,000 worth of the profits, or $50. Lucky CEO!
Thus, the primary reason Fools dislike stock dilution is that it often represents a transfer of wealth from outside shareholders -- you and me -- to insiders.
Dilution Scenario Two
Stock dilution, however, isn't always bad. But before we look at when it can be good, let's consider the iffy situation of a company that acquires another one and pays for the purchase in stock. Say Phaser wants to expand its business. Phaser's solution is to buy out a rival.Since Phaser hasn't sold anything and doesn't have any actual, er, cash, it wants to issue its own stock to target company shareholders in exchange for their shares.
Now, if the target company has a market cap of roughly $32 billion. With Phaser shares trading for $10 a stub, our intrepid company will have to issue 3.2 billion new shares to acquire its heart's desire. Doing that will dilute Joe and Phaser's other shareholders thousands of times over. In what universe could that much dilution possibly be a good deal for Phaser shareholders?
The answer requires another question: Is Phaser overpaying for its purchase? If Phaser pays a price equal to target company's intrinsic value as a business, then the dilution created by the purchase does not really hurt Joe. Yes, Joe's slice of the merged Phaser pie looks much smaller than his slice of Phaser alone does. But the new pie is much bigger. Picture this: Joe is receiving a much thinner but also much longer slice of the (Phaser+Target) pie, in return for his original wide but stubby slice of Phaser.
And there's another possibility to consider. Alone, Phaser may not be objectively "worth" the $1 million market cap that the market accords it. If Phaser's stock is overvalued, then paying for an acquisition in inflated-value stock may be a smarter move than paying in cash.
Issuing More Stock through public offering or Convertible Bonds
When Phaser gives 100,000 shares to its CEO for a nominal "exercise" price, that's bad for outside shareholders. But what if, before Phaser decides to go that route, the message-board rumor mill gets going and anoints Phaser as the next moon-rocket stock? As Phaser's stock price doubles, triples, and then jumps 10 times more, company management reconsiders, decides not to issue options, and instead sells the 100,000 shares on the open market -- at $600 a pop.
If the company's intrinsic value hasn't changed, and if only its stock price has increased, then this is great news for Joe. After the secondary offering is completed, he again owns 10,000 shares out of 200,000, or 5% -- down from his original 10%. However, Phaser itself is now worth more -- not just from the rumor-bubble pricing of its stock but also intrinsically, because the company has traded 100,000 shares for $60 million in cash. That cash now sits in the company's bank account, and Joe owns 5% of it, or $3 million.
So to sum up, whenever a company issues shares at a price higher than the shares' intrinsic value -- whether it does so to buy another company or to sell the shares and raise cash on the market -- an outside shareholder benefits, despite his or her percentage of ownership being diluted.
The above article is courtesy MF
What does all this mean to an average investor named Joe?
Stock dilution refers to when a company issues additional stock, for any purpose. Some of those purposes are bad for outside shareholders, some are neutral, and believe it or not, some are actually good. We examine all three scenarios to see how they can affect us as investors.
Example.
In 2005, Phaser(a hypothetical company) had 100,000 shares of common stock outstanding, a market cap of $1 million, and $100 of net profits.An individual investor Joe, on Dec. 31, 2006, bought 10,000 shares of Phaser stock. When the company reported its earnings, Joe was elated to learn that, by virtue of his stake, he vicariously earned $10 worth of Phaser's profits. Little did he know what 2007 held in store for him.
Dilution Scenario One
In 2007, Phaser decides to engage in the worst of the three main ways that companies dilute their shares: It issues 100,000 stock options to its CEO. For the time being, Phaser has a "basic share count" of 100,000 shares actually outstanding. But because its CEO will eventually exercise his or her stock options (i.e., tell the company to issue 100,000 shares to him or her and then sell them on the open market), Phaser now has a hypothetical, or "diluted," share count of 200,000.
That's bad news for Joe. While he will still own his 10,000 shares, his ownership stake will be diluted once the company issues that extra stock. What does that mean? Well, when Phaser's share count stood at 100,000, and it earned $100, Joe was entitled to 10% (10,000/100,000) worth of those profits, or $10.
But when Phaser issues those 100,000 extra shares, Joe's shares will not equal 10% but just 5% (10,000/200,000) of all shares outstanding. If Phaser earns $100 again the next year, Joe's take from that haul is just $5. Poor Joe.
The CEO, on the other hand, gets 100,000/200,000 worth of the profits, or $50. Lucky CEO!
Thus, the primary reason Fools dislike stock dilution is that it often represents a transfer of wealth from outside shareholders -- you and me -- to insiders.
Dilution Scenario Two
Stock dilution, however, isn't always bad. But before we look at when it can be good, let's consider the iffy situation of a company that acquires another one and pays for the purchase in stock. Say Phaser wants to expand its business. Phaser's solution is to buy out a rival.Since Phaser hasn't sold anything and doesn't have any actual, er, cash, it wants to issue its own stock to target company shareholders in exchange for their shares.
Now, if the target company has a market cap of roughly $32 billion. With Phaser shares trading for $10 a stub, our intrepid company will have to issue 3.2 billion new shares to acquire its heart's desire. Doing that will dilute Joe and Phaser's other shareholders thousands of times over. In what universe could that much dilution possibly be a good deal for Phaser shareholders?
The answer requires another question: Is Phaser overpaying for its purchase? If Phaser pays a price equal to target company's intrinsic value as a business, then the dilution created by the purchase does not really hurt Joe. Yes, Joe's slice of the merged Phaser pie looks much smaller than his slice of Phaser alone does. But the new pie is much bigger. Picture this: Joe is receiving a much thinner but also much longer slice of the (Phaser+Target) pie, in return for his original wide but stubby slice of Phaser.
And there's another possibility to consider. Alone, Phaser may not be objectively "worth" the $1 million market cap that the market accords it. If Phaser's stock is overvalued, then paying for an acquisition in inflated-value stock may be a smarter move than paying in cash.
Issuing More Stock through public offering or Convertible Bonds
When Phaser gives 100,000 shares to its CEO for a nominal "exercise" price, that's bad for outside shareholders. But what if, before Phaser decides to go that route, the message-board rumor mill gets going and anoints Phaser as the next moon-rocket stock? As Phaser's stock price doubles, triples, and then jumps 10 times more, company management reconsiders, decides not to issue options, and instead sells the 100,000 shares on the open market -- at $600 a pop.
If the company's intrinsic value hasn't changed, and if only its stock price has increased, then this is great news for Joe. After the secondary offering is completed, he again owns 10,000 shares out of 200,000, or 5% -- down from his original 10%. However, Phaser itself is now worth more -- not just from the rumor-bubble pricing of its stock but also intrinsically, because the company has traded 100,000 shares for $60 million in cash. That cash now sits in the company's bank account, and Joe owns 5% of it, or $3 million.
So to sum up, whenever a company issues shares at a price higher than the shares' intrinsic value -- whether it does so to buy another company or to sell the shares and raise cash on the market -- an outside shareholder benefits, despite his or her percentage of ownership being diluted.
The above article is courtesy MF
Monday, November 26, 2007
Living in a Southern California Bubble
24 Shady Lane, Irvine, CA 92603, was purchased in January 2005 for $1,157,000. The combined first and second mortgages totalled $1,156,730 leaving a downpayment of $270.
By April 2007, they had multiple refinances on it finally with a first mortgage for $999,999, and a HELOC for $491,000. These owners pulled $333,000 in HELOC money.
Assuming they spent the entire HELOC, and assuming the negative amortization on the first mortgage has increased the loan balance, the total debt on the property exceeds $1,500,000. The asking price of $1,249,000 does not look like a rollback, but if the property actually sells at this price, the lender on the HELOC will lose over $300,000.
This is the story of a lot of households in California.
The Winner - The owners (may be...)
The Loser - The bank (lack of due diligence and loan standards)
This information is courtesy IHB
By April 2007, they had multiple refinances on it finally with a first mortgage for $999,999, and a HELOC for $491,000. These owners pulled $333,000 in HELOC money.
Assuming they spent the entire HELOC, and assuming the negative amortization on the first mortgage has increased the loan balance, the total debt on the property exceeds $1,500,000. The asking price of $1,249,000 does not look like a rollback, but if the property actually sells at this price, the lender on the HELOC will lose over $300,000.
This is the story of a lot of households in California.
The Winner - The owners (may be...)
The Loser - The bank (lack of due diligence and loan standards)
This information is courtesy IHB
What are SIVs?
Background...
SIV (Structured Investment Vehicle) has high net worth investors like hedge funds or wealthy individuals who invest say $1 Billion in the SIV (the equity). Then the SIV issues commercial paper (CP) and medium-term notes (MTN) that pay slightly higher rates than similar duration paper. The typical SIV, according to Fitch, uses 14 times leverage, so in our example the SIV would sell CP and MTN for $14 Billion.
Now the SIV invests this $15 Billion ($1 Billion equity and $14 Billion borrowed) in longer term notes. The idea is simple: borrow short, lend long, hedge the interest rate and credit risks - and the profits flow to the investors in the SIV.
Usually the bank sets up the SIV, attracts the investors, manages the SIV for a fee - and there was always the appearance that the SIV CP was backed by the bank - perhaps allowing the CP and MTN to pay lower interest rates.
Now the problem....and how HSBC plans to solve it
Some SIVs invested in asset backed paper, backed by home mortgages. Even though the SIVs almost always invested in the highest tranches (with no losses to date), the market value of these assets has fallen recently.This means that the investors in the SIV (the equity) have taken paper losses on their $1 Billion investment.In fact many of the SIV NAVs have fallen substantially.A NAV of 71% means the $1 Billion equity in the example is now worth $710 million.
Once the value of the equity falls enough (usually 50%) there is usually a trigger event forcing the SIV to liquidate the longer term investments. A forced liquidation might not only wipe out all the remaining SIV equity, but the holders of the CP and MTN might take some losses too.
This has made potential investors in CP and MTN (not to be confused with the investors in the equity of the SIV) to refuse to buy any more CP. Since there is a duration mismatch - the investments are in longer term notes, CP is less than 9 months - the SIV is stuck with a liquidity problem when the CP comes due.
To solve this problem, a bank like HSBC could explicity guarantee the CP and MTN, and this would attract investors in CP and MTN again. But under accounting rules, this guarantee means the SIV belongs on the bank's balance sheet. The structure stays the same - the SIV equity investors still take the losses - but there is no liquidation event. If the losses exceed the equity investment ($1 Billion in our example), then the bank would start taking losses.
The balance sheet lists the assets and liabilities of the company. Moving the SIV to the balance sheet simply means adding the $15 Billion in assets (those longer term notes) to the Asset portion of the balance sheet, and moving the $15 Billion in CP, MTN and SIV equity to Liabilities. The new assets balance with the new liabilities, and there is no income or loss for the bank. Since the equity will take the losses first, any mark down in the $15 Billion in assets will be matched by a mark down in the liabilities - up to $1 Billion.
Problem for the bank?
There is an impact on the ratios of the bank - the reason the SIVs were off the balance sheet in the first place - and this limits other lending activities of the bank, contributing to the credit contraction.
The above information is Courtesy CR
SIV (Structured Investment Vehicle) has high net worth investors like hedge funds or wealthy individuals who invest say $1 Billion in the SIV (the equity). Then the SIV issues commercial paper (CP) and medium-term notes (MTN) that pay slightly higher rates than similar duration paper. The typical SIV, according to Fitch, uses 14 times leverage, so in our example the SIV would sell CP and MTN for $14 Billion.
Now the SIV invests this $15 Billion ($1 Billion equity and $14 Billion borrowed) in longer term notes. The idea is simple: borrow short, lend long, hedge the interest rate and credit risks - and the profits flow to the investors in the SIV.
Usually the bank sets up the SIV, attracts the investors, manages the SIV for a fee - and there was always the appearance that the SIV CP was backed by the bank - perhaps allowing the CP and MTN to pay lower interest rates.
Now the problem....and how HSBC plans to solve it
Some SIVs invested in asset backed paper, backed by home mortgages. Even though the SIVs almost always invested in the highest tranches (with no losses to date), the market value of these assets has fallen recently.This means that the investors in the SIV (the equity) have taken paper losses on their $1 Billion investment.In fact many of the SIV NAVs have fallen substantially.A NAV of 71% means the $1 Billion equity in the example is now worth $710 million.
Once the value of the equity falls enough (usually 50%) there is usually a trigger event forcing the SIV to liquidate the longer term investments. A forced liquidation might not only wipe out all the remaining SIV equity, but the holders of the CP and MTN might take some losses too.
This has made potential investors in CP and MTN (not to be confused with the investors in the equity of the SIV) to refuse to buy any more CP. Since there is a duration mismatch - the investments are in longer term notes, CP is less than 9 months - the SIV is stuck with a liquidity problem when the CP comes due.
To solve this problem, a bank like HSBC could explicity guarantee the CP and MTN, and this would attract investors in CP and MTN again. But under accounting rules, this guarantee means the SIV belongs on the bank's balance sheet. The structure stays the same - the SIV equity investors still take the losses - but there is no liquidation event. If the losses exceed the equity investment ($1 Billion in our example), then the bank would start taking losses.
The balance sheet lists the assets and liabilities of the company. Moving the SIV to the balance sheet simply means adding the $15 Billion in assets (those longer term notes) to the Asset portion of the balance sheet, and moving the $15 Billion in CP, MTN and SIV equity to Liabilities. The new assets balance with the new liabilities, and there is no income or loss for the bank. Since the equity will take the losses first, any mark down in the $15 Billion in assets will be matched by a mark down in the liabilities - up to $1 Billion.
Problem for the bank?
There is an impact on the ratios of the bank - the reason the SIVs were off the balance sheet in the first place - and this limits other lending activities of the bank, contributing to the credit contraction.
The above information is Courtesy CR
Saturday, November 24, 2007
Is this a confirmation to Sell?
Maybe.....
1. DJIA and DJTA must undergo a significant correction from joint new highs.(July 2007)
2. In their subsequent rally attempt following that correction, either one or both of the averages fail to rise above their precorrection highs. (Sep 2007)
3. Both averages must then drop below their respective correction lows. (Nov 2007)
For those who care, 12,846 is the number to watch..........
1. DJIA and DJTA must undergo a significant correction from joint new highs.(July 2007)
2. In their subsequent rally attempt following that correction, either one or both of the averages fail to rise above their precorrection highs. (Sep 2007)
3. Both averages must then drop below their respective correction lows. (Nov 2007)
For those who care, 12,846 is the number to watch..........
Monday, October 29, 2007
The Sensex Story
Imagine an investment fetching an average of 19% compounded annual returns for the next 17 years.
That is what the Indian Stock market has done since 1990
To keep things in perspective, if you invested 10,000($/EUR/Yen/Rs) in July 1990 it would have been 200,000($/EUR/Yen/Rs) in Oct 2007.
The journey....
1000, July 25, 1990
On July 25, 1990, the Sensex touched the magical four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results.
2000, January 15, 1992
On January 15, 1992, the Sensex crossed the 2,000-mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and current Prime Minister Dr Manmohan Singh.
3000, February 29, 1992
On February 29, 1992, the Sensex surged past the 3000 mark in the wake of the market-friendly Budget announced by the then Finance Minister, Dr Manmohan Singh.
4000, March 30, 1992
On March 30, 1992, the Sensex crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.
5000, October 8, 1999
On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-led coalition won the majority in the 13th Lok Sabha election.
6000, February 11, 2000
On February 11, 2000, the infotech boom helped the Sensex to cross the 6,000-mark and hit and all time high of 6,006.
7000, June 20, 2005
On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance Energy [Get Quote], Reliance Capital [Get Quote], and IPCL [Get Quote] made huge gains. This helped the Sensex crossed 7,000 points for the first time.
8000, September 8, 2005
On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index -- the Sensex -- crossed the 8000 level following brisk buying by foreign and domestic funds in early trading.
9000, November 28, 2005
The Sensex on November 28, 2005 crossed the magical figure of 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors.
10,000, February 6, 2006
The Sensex on February 6, 2006 touched 10,003 points during mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006.
11,000, March 21, 2006
The Sensex on March 21, 2006 crossed the magical figure of 11,000 and touched a life-time peak of 11,001 points during mid-session at the Bombay Stock Exchange for the first time. However, it was on March 27, 2006 that the Sensex first closed at over 11,000 points.
12,000, April 20, 2006
The Sensex on April 20, 2006 crossed the 12,000-mark and closed at a peak of 12,040 points for the first time.
13,000, October 30, 2006
The Sensex on October 30, 2006 crossed the magical figure of 13,000 and closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.
14,000, December 5, 2006
The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028 points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.
15,000, July 6, 2007
The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005 points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000 points.
16,000, September 19, 2007
The Sensex scaled yet another milestone during early morning trade on September 19, 2007. Within minutes after trading began, the Sensex crossed 16,000, rising by 450 points from the previous close. The 30-share Bombay Stock Exchange's sensitive index took 53 days to reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points.
The Sensex finally ended with its biggest-ever single day gain of 654 points at 16,323. The NSE Nifty gained 186 points to close at 4,732.
17,000, September 26, 2007
The Sensex scaled yet another height during early morning trade on September 26, 2007. Within minutes after trading began, the Sensex crossed the 17,000-mark . Some profit taking towards the end, saw the index slip into red to 16,887 - down 187 points from the day's high. The Sensex ended with a gain of 22 points at 16,921.
18,000, October 09, 2007
The BSE Sensex crossed the 18,000-mark on October 09, 2007. It took just 8 days to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time intra-day high of 18,327. It finally gained 789 points to close at an all-time high of 18,280. The market set several new records including the biggest single day gain of 789 points at close, as well as the largest intra-day gains of 993 points in absolute term backed by frenzied buying after the news of the UPA and Left meeting on October 22 put an end to the worries of an impending election.
19,000, October 15, 2007
The Sensex crossed the 19,000-mark backed by revival of funds-based buying in blue chip stocks in metal, capital goods and refinery sectors. The index gained the last 1,000 points in just four trading days. The index touched a fresh all-time intra-day high of 19,096, and finally ended with a smart gain of 640 points at 19,059.The Nifty gained 242 points to close at 5,670.
20,000, October 29, 2007
The Sensex crossed the 20,000 mark on the back of aggressive buying by funds ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain 1,000 points after the index crossed the 19,000-mark on October 15. The major drivers of today's rally were index heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC Bank and SBI among others. The 30-share index spurted in the last five minutes of trade to fly-past the crucial level and scaled a new intra-day peak at 20,024.87 points before ending at its fresh closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50 points before ending at 5,905.90, showing a hefty gain of 203.60 points.
That is what the Indian Stock market has done since 1990
To keep things in perspective, if you invested 10,000($/EUR/Yen/Rs) in July 1990 it would have been 200,000($/EUR/Yen/Rs) in Oct 2007.
The journey....
1000, July 25, 1990
On July 25, 1990, the Sensex touched the magical four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results.
2000, January 15, 1992
On January 15, 1992, the Sensex crossed the 2,000-mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and current Prime Minister Dr Manmohan Singh.
3000, February 29, 1992
On February 29, 1992, the Sensex surged past the 3000 mark in the wake of the market-friendly Budget announced by the then Finance Minister, Dr Manmohan Singh.
4000, March 30, 1992
On March 30, 1992, the Sensex crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.
5000, October 8, 1999
On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-led coalition won the majority in the 13th Lok Sabha election.
6000, February 11, 2000
On February 11, 2000, the infotech boom helped the Sensex to cross the 6,000-mark and hit and all time high of 6,006.
7000, June 20, 2005
On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance Energy [Get Quote], Reliance Capital [Get Quote], and IPCL [Get Quote] made huge gains. This helped the Sensex crossed 7,000 points for the first time.
8000, September 8, 2005
On September 8, 2005, the Bombay Stock Exchange's benchmark 30-share index -- the Sensex -- crossed the 8000 level following brisk buying by foreign and domestic funds in early trading.
9000, November 28, 2005
The Sensex on November 28, 2005 crossed the magical figure of 9000 to touch 9000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors.
10,000, February 6, 2006
The Sensex on February 6, 2006 touched 10,003 points during mid-session. The Sensex finally closed above the 10K-mark on February 7, 2006.
11,000, March 21, 2006
The Sensex on March 21, 2006 crossed the magical figure of 11,000 and touched a life-time peak of 11,001 points during mid-session at the Bombay Stock Exchange for the first time. However, it was on March 27, 2006 that the Sensex first closed at over 11,000 points.
12,000, April 20, 2006
The Sensex on April 20, 2006 crossed the 12,000-mark and closed at a peak of 12,040 points for the first time.
13,000, October 30, 2006
The Sensex on October 30, 2006 crossed the magical figure of 13,000 and closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.
14,000, December 5, 2006
The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028 points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.
15,000, July 6, 2007
The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005 points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000 points.
16,000, September 19, 2007
The Sensex scaled yet another milestone during early morning trade on September 19, 2007. Within minutes after trading began, the Sensex crossed 16,000, rising by 450 points from the previous close. The 30-share Bombay Stock Exchange's sensitive index took 53 days to reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points.
The Sensex finally ended with its biggest-ever single day gain of 654 points at 16,323. The NSE Nifty gained 186 points to close at 4,732.
17,000, September 26, 2007
The Sensex scaled yet another height during early morning trade on September 26, 2007. Within minutes after trading began, the Sensex crossed the 17,000-mark . Some profit taking towards the end, saw the index slip into red to 16,887 - down 187 points from the day's high. The Sensex ended with a gain of 22 points at 16,921.
18,000, October 09, 2007
The BSE Sensex crossed the 18,000-mark on October 09, 2007. It took just 8 days to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time intra-day high of 18,327. It finally gained 789 points to close at an all-time high of 18,280. The market set several new records including the biggest single day gain of 789 points at close, as well as the largest intra-day gains of 993 points in absolute term backed by frenzied buying after the news of the UPA and Left meeting on October 22 put an end to the worries of an impending election.
19,000, October 15, 2007
The Sensex crossed the 19,000-mark backed by revival of funds-based buying in blue chip stocks in metal, capital goods and refinery sectors. The index gained the last 1,000 points in just four trading days. The index touched a fresh all-time intra-day high of 19,096, and finally ended with a smart gain of 640 points at 19,059.The Nifty gained 242 points to close at 5,670.
20,000, October 29, 2007
The Sensex crossed the 20,000 mark on the back of aggressive buying by funds ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain 1,000 points after the index crossed the 19,000-mark on October 15. The major drivers of today's rally were index heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC Bank and SBI among others. The 30-share index spurted in the last five minutes of trade to fly-past the crucial level and scaled a new intra-day peak at 20,024.87 points before ending at its fresh closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50 points before ending at 5,905.90, showing a hefty gain of 203.60 points.
Thursday, October 18, 2007
3Q FY Earning Results
SYM EST ACTUAL LASTQTR
INTC 0.30 0.31 0.22
YHOO 0.08 0.11 0.11
JPM 0.90 0.97 0.92
AMD -0.62 -0.49 0.27
BAC 1.06 0.82 1.22
GOOG 3.78 3.91 2.62
NOK 0.45 0.55 0.29
AAPL 0.86 1.01 0.62
TXN 0.50 0.52 0.45
BRCM 0.27 0.27 0.32
SAY 0.26 n/a 0.20
MOT 0.04 0.06 0.34
MSFT 0.39 n/a 0.35
SBUX 0.21 0.21 0.17
HPQ 0.82 0.86 0.68
QCOM 0.53 0.54 0.42
INTC 0.30 0.31 0.22
YHOO 0.08 0.11 0.11
JPM 0.90 0.97 0.92
AMD -0.62 -0.49 0.27
BAC 1.06 0.82 1.22
GOOG 3.78 3.91 2.62
NOK 0.45 0.55 0.29
AAPL 0.86 1.01 0.62
TXN 0.50 0.52 0.45
BRCM 0.27 0.27 0.32
SAY 0.26 n/a 0.20
MOT 0.04 0.06 0.34
MSFT 0.39 n/a 0.35
SBUX 0.21 0.21 0.17
HPQ 0.82 0.86 0.68
QCOM 0.53 0.54 0.42
Friday, September 14, 2007
3Q FY Earnings
20071016 IIF
20071016 INTC
20071016 YHOO
20071017 JPM
20071018 AMD
20071018 BAC
20071018 GOOG
20071018 NOK
20071022 AAPL
20071022 TXN
20071023 BRCM
20071023 SAY
20071025 ERIC
20071025 MOT
20071025 MSFT
20071031 ALU
20071031 DB
20071114 IFX
20071119 HPQ
20071129 DELL
20071115 SBUX
20071108 QCOM
**********Earnings Estimates************
SYMB ThisQ NextQ ThisY NextY
IIF
INTC 0.31 0.37 1.15 1.40
YHOO 0.09 0.13 0.43 0.58
JPM 0.92 1.10 4.50 4.83
AMD -0.62 -0.35 -2.71 -0.86
BAC 1.06 1.21 4.75 5.22
GOOG 3.47 3.99 14.00 18.39
NOK 0.46 0.56 2.01 2.12
AAPL 0.83 1.36 3.75 4.50
TXN 0.50 0.51 1.78 2.14
BRCM 0.15 0.18 0.75 0.99
SAY 0.28 0.31 1.23 1.49
ERIC 0.59 0.87 2.67 2.96
MOT 0.03 0.11 0.17 0.71
MSFT 0.39 0.43 1.72 1.93
ALU 0.06 0.21 0.07 0.60
DB 1.75 3.41 16.22 15.44
IFX -0.18 0.05 -0.24 0.36
HPQ 0.82 0.77 2.87 3.25
DELL 0.35 0.38 1.39 1.69
SBUX 0.21 0.31 0.88 1.06
QCOM 0.51 0.49 1.89 2.07
20071016 INTC
20071016 YHOO
20071017 JPM
20071018 AMD
20071018 BAC
20071018 GOOG
20071018 NOK
20071022 AAPL
20071022 TXN
20071023 BRCM
20071023 SAY
20071025 ERIC
20071025 MOT
20071025 MSFT
20071031 ALU
20071031 DB
20071114 IFX
20071119 HPQ
20071129 DELL
20071115 SBUX
20071108 QCOM
**********Earnings Estimates************
SYMB ThisQ NextQ ThisY NextY
IIF
INTC 0.31 0.37 1.15 1.40
YHOO 0.09 0.13 0.43 0.58
JPM 0.92 1.10 4.50 4.83
AMD -0.62 -0.35 -2.71 -0.86
BAC 1.06 1.21 4.75 5.22
GOOG 3.47 3.99 14.00 18.39
NOK 0.46 0.56 2.01 2.12
AAPL 0.83 1.36 3.75 4.50
TXN 0.50 0.51 1.78 2.14
BRCM 0.15 0.18 0.75 0.99
SAY 0.28 0.31 1.23 1.49
ERIC 0.59 0.87 2.67 2.96
MOT 0.03 0.11 0.17 0.71
MSFT 0.39 0.43 1.72 1.93
ALU 0.06 0.21 0.07 0.60
DB 1.75 3.41 16.22 15.44
IFX -0.18 0.05 -0.24 0.36
HPQ 0.82 0.77 2.87 3.25
DELL 0.35 0.38 1.39 1.69
SBUX 0.21 0.31 0.88 1.06
QCOM 0.51 0.49 1.89 2.07
Friday, August 31, 2007
Wednesday, August 22, 2007
Thursday, August 2, 2007
HOW TO - Get Info from the Web
Yahoo.com
MoneyCentral
MarketWatch - Enter the ticker symbol and look over the links presented.
PR Newswire - Stocks that don't receive a lot of attention from Wall Street.
Quotetracker- News-related item on any stock.
Briefing.com
EDGAR Database
MoneyCentral
MarketWatch - Enter the ticker symbol and look over the links presented.
PR Newswire - Stocks that don't receive a lot of attention from Wall Street.
Quotetracker- News-related item on any stock.
Briefing.com
EDGAR Database
Monday, July 30, 2007
Understanding the Rupee being fully convertible now
There has been plenty of hype over the possibility of the Indian rupee becoming fully convertible after Prime Minister Manmohan Singh recently suggested that the Reserve Bank of India as the central bank of the country look at the modalities for such a radical measure.
The Prime Minister did not specify a time frame. That has been left to an expert committee appointed by the RBI under the chairmanship of S. S. Tarapore. It is expected that the committee will take four months to submit its report and a road map. Hence there is no reason at all to rush to a conclusion that full convertibility of the rupee is round the corner.
It is important to note that full convertibility is a gradual process, given our present state of integration with the outside world.
Current account
There has already been a substantial relaxation of foreign exchange controls: the rupee has been convertible on the current account since 1994. Resident Indians and companies now have access to foreign exchange for a variety of purposes, including education and travel. They can receive and make payments in foreign currencies on trade account.
Full convertibility means that restrictions on capital account too will be withdrawn. This basically implies that domestic assets — real estate and shares — can be sold to foreigners and payments received without previous regulatory clearance. There will also be a corresponding right for foreigners — not just non-resident Indians — to invest in Indian assets.
Earlier moves
Already there have been substantial moves in the direction of full convertibility. The stock markets have been fuelled by foreign money, which comes in through registered institutional investors. Many categories of resident Indians have been allowed to open foreign currency accounts abroad. India companies have been making overseas acquisitions for which they have given generous access to foreign currency resources.
In practice there can never be a situation where capital moves across national borders totally unhindered by controls. Full convertibility implies fewer but not a complete dismantling of controls. Even developed countries such as the U.S. restrict investments in specific sectors. In India too, it has never been easy even for non-resident Indians (who have enjoyed substantial capital account convertibility for long) to acquire property and real estate. Then again in India, there are caps on foreign direct investment (FDI). It is fanciful to think that all these will be scrapped to permit unrestricted capital flows only to prove that a full convertibility regime has arrived.
Monitoring remittances
Recent steps to check money laundering and the necessity to verify customers' credentials (Know Your Customer rules) have forced banks to monitor remittances into the country. There is no way a full convertibility regime can dispense with those.
One relevant point missed out in the debate over convertibility is this: whether the rupee is convertible or not depends as much on outsiders' preference to hold the currency as on the willingness of the national monetary authorities to "let go". Simply stated, it is not enough if the RBI decrees that the rupee is convertible. There must be demand for the rupee from a variety of legitimate sources — those engaged in trade, investment and so on. Part of the requirements for the rupee need not even be for India-specific transactions.
Debt market needs depth
And demand implies adequate supply of the currency and the infrastructure to cope with the new full convertible status. There should be an active rupee market outside India, a bond market and a facility to hedge rupee transactions over long time frames.
At present there is a felt need within India for a debt market with depth. The latest budget has increased the cap on FII investment in debt securities but compared to the booming equity markets the debt market in India is unlikely to attract anywhere near the same levels of foreign investment even if the rupee becomes convertible on capital account too.
Pertinently, the rupee, although an approved currency in the invoicing of imports and exports, is far less popular compared to the hard currencies, especially the dollar.
Don't ignore the flip side
It is also possible that speculators will take larger bets on the rupee in a full convertibility regime. In fact there are far too many points against full convertibility, even if it could be achieved in the near future.
The exchange rate policy in India, involving a managed float, has been emulated by many other developing countries. It has ensured reasonable stability of the exchange rate and to the extent possible discouraged speculative activity. A full convertibility regime would automatically lead to an exchange rate system in which the rupee will float freely against other currencies.
The benefits claimed — a free flow of capital both ways (to and from India) optimising returns to investors and giving a major boost to the financial markets — are realisable only if all imperfections, not only in India but also in the developed countries, are removed.
Far more likely, there will not only be increased volatility — inevitable perhaps even in the present system of a managed float — but financial instability. As the Indian economy gets more connected with the outside world, it will not be possible to insulate it from outside shocks. Full convertibility, implying no restrictions whatsoever on the movement of currency and capital, is the end result of globalisation. It might be a statement of economic confidence but the path towards it has to be well considered. Needless to add, full convertibility will be beneficial only if the domestic economy is put in good shape first. The expert group working on a roadmap will surely stress the same points favouring macroeconomic consolidation which an earlier committee — also under Mr. Tarapore — had set out in May 1997.
It is worth recapitulating its recommendations if only to show that the path towards convertibility cannot be as smooth as it is assumed. Second, since the major goals set in 1997 (to be reached over the next three years) have not been reached even now, it is evident that there cannot be a compressed time frame.
The Hindu. (C. R. L. NARASIMHAN)
Historical Issues for Convertability
In the year 1990-91 balance of payments position facing the country became critical and foreign exchange reserves had been depleted to dangerously low levels. Imports had to be severely curtailed in the course 1990-91 because of shortage of foreign exchange. Importers were asked to deposit an amount equal to 200% of the L.C. value with Banks in advance to be eligible for getting the L.Cs opened. This affected the availability of many essential items and also led to distinct slow down of industrial growth.
The urgent need of the hour was assessed as under:-
1.
To aim at quick revival of the momentum of exports.
2.
To create strong incentives to economise on imports, without resorting to proliferation of licensing controls, which promote delay and inefficiency, generate arbitrariness and stifle enterprise.
3.
There was urgent need to create an environment free from Bureaucratic controls in which our exporters will be able to respond with speed and flexibility to changing international conditions.
4.
To recognise the change that is taking place in the world economy, where countries are shedding isolation ands getting increasingly integrated, and to shape our economic policies as part of the prevailing global environment.
Government announced an initial package of trade policy reforms on 4th July 1991. Its main features are as under:
1.
Essential imports such as POL and fertilizers were fully protected.
2.
Import of other raw materials and components were linked to export performance through an enlargement and restructuring of the replenishment licensing system.
3.
A tradeable Exim Scrip allowing for free foreign exchange for import of goods up to 30% of the F.O.B. export value was allowed to exporters. These scrips were freely tradable in the open market, which fetched about 30% premium to the exporters.
4.
Government abolished cash compensatory support for exporters.
5.
Licensing complexities were reduced.
6.
In view of procedural anomalies the Exim Scrip system was subsequently withdrawn and Government announced partial convertibility of the rupee in the Central Budget for 1992-93 by way of a dual exchange system, which allowed conversion of 60% of the foreign exchange earnings at the rate determined in the foreign exchange market. The balance 40% foreign exchange was to be surrendered to the Reserve Bank at official exchange rate for financing of essential imports. The exporters were getting a rate equivalent to the weighted average of market rate (for 60%) and official rate (for 40%), while private imports were paid at market rates.
7.
Shortly thereafter in March 1992, the Government announced 100% convertibility on Current Account, under which 100% foreign exchange earnings can be converted at market rates.
After years of administered exchange rate full convertibility came to India. A fully convertible currency provides freedom to both residents and non-residents to trade in goods, services and assets, thereby, integrates the domestic economy into the world economy. Convertibility in current account along with trade liberalization measures are bound to enhance competitiveness of domestic tradables and make world prices to prevail in the domestic economy. Convertibility measures that accompany the easing of controls on foreign investment and capital inflows are expected to boost technology transfers and enhance productive growth of the domestic economic distortions of an otherwise inward looking trade regime.
The rupee convertibility process has thus been implemented since July 1991, involving several important elements as under:
1.
The relaxation of QR (Quantitative Restrictions) Regime involving import quotas and licensing.
2.
The reduction of the level and dispersions of import tariff rates
3.
The elimination of several export subsidization schemes;
4.
The liberalization of exchange restrictions on capital inflows, particularly the inflow the foreign direct and portfolio investments, and
5.
The introduction of market driven exchange rates of the rupee, instead of administered system through the mechanism of basket peg
Full convertibility of the currency does not prevent our discretion to protect our essential trade interests. Generally countries with currency convertibility have practiced various degree of controls to suit national interests from time to time. Full convertibility does not mean the unrestricted use of rupee for all types of external transactions. All transactions are still conducted within the framework of exchange controls, as prescribed by the R.B.I. On trade account and on account of the receipt side of the invisible, the rupee is fully convertible at market determined exchange rates. The payment side of the invisible and receipts and payment of capital account are subject to exchange control. However exchange rate for all these permissible transactions are undertaken at free market exchange rates.
- - - : ( o0o ) : - - -
2.Define "Convertibility"
In a strict sense a currency can be considered convertible, only if both residents and non-residents have full freedom to use and exchange it for any purpose whatsoever, at some definite rate of exchange. However in practice large number of currencies are considered convertible with various degrees of restrictions and controls.
The International Monetary Fund provides a working definition of convertibility under Article VIII, which states as under:-
“No member shall, without the approval of the fund, impose restrictions on making of payment and transfers for current transactions.”
The IMF concept considers convertibility only for current account transactions, thus leaving at the discretion of the country to regulate flows on capital account. Generally countries with currency convertibility have practised various degree of controls to suit their national interests from time to time. Thus currency convertibility implies absence of restrictions on foreign exchange transactions and not necessarily on trade or capital flow. This point has been clarified properly by IMF, which states as under:-
“Thus, although measure formulated as quantitative limitation on imports will have the indirect effect, it is not for that reason a restriction on payments within the meaning of the provision…Restrictions on trade do not become restrictions on payment within the meaning of Article VIII, because they are imposed for balance of payments reasons”.
Under the present floating system, exporters can realise their entire export earnings at the free market rate. All imports, including the Government imports consisting of petroleum, food, fertilizers and defence have to be paid at free market rates. The substance of convertibility efforts is to dispense with the discretionary management of foreign exchange and exchange rates and to adopt a more liberal and market driven exchange allocation process. It needs to be noted that here that the full convertibility does not mean the unrestricted use of the rupee for all types of India’s external transactions. All transactions are still conducted within the framework of exchange controls, as prescribed by the R.B.I.
The full convertibility features are LERMS (Liberalized Exchange Control Management System) and its main features are summarised as under:-
*
The exchange rates of the rupee are determined by the free market forces of demand and supply. Free market rates are quoted by authorised dealers (ADs).
*
Like any other market prices, the exchange rates both spot and forward can vary within a day, between days and even around medium term rend.
*
All commercial transactions in the current account and capital account are undertaken at the free-market driven rates, whether on government or private account.
*
Foreign exchange remittances abroad are subject to exchange control regulations although the AD can remit in many areas upto certain amounts without Reserve Bank’s permission. This implies full convertibility is not applicable to the invisible trade.
*
All export proceeds and inward remittances need to be surrendered with a 156% retention option in a foreign currency account with the AD.
*
The intervention currency continues to be U.S. dollar, which the Reserve Bank can buy and sell from and to the Ads at its discretion. This route can provide temporary stability in the exchange markets.
*
The Reserve Bank provides two way quotes of the U.S. Dollar, which can change several times in a day, depending on market pressures.
*
The Reserve Bank will not ordinarily buy or sell any other currency, either spot ort forward; rather will undertake swap transactions with the Ads. A swap involves the Reserve Bank buying the U.S. Dollar spot and selling forward simultaneously for delivery in two to six months.
*
The RBI will sell U.S. Dollars to the AD at the market rate, for debt service payments on Government Account and other payments, only a transitory arrangement, such as for meeting 40% value of imports under advance licences, special import licences, REP licences for import of raw materials, gems and jewellery exports, and for meeting the full value of imports under the outstanding EXIM scrips and such other licences treated on part with these scrips.
*
For trade with Russian Republics where the invoicing is in freely convertible currency the market related exchange rate are applicable.
*
Transactions routed through the ACU arrangement (except those settled in the Indian rupees) will be based on Reserve Bank’s rate for ACU currencies and for the Asian Monetary Unit.
- - - : ( o0o ) : - - -
3. What do you understand by the term “Current Account” and “Capital Account” Convertibility?
Current account includes all transactions, which give rise to or use of our National income, while Capital Account consist of short term and long term capital transactions.
Current Account Transactions covers the following.
1.
All imports and exports of merchandise
2.
Invisible Exports and Imports (sale/purchase of services)
3.
Inward private remittances to & fro
4.
Pension payments (to & fro)
5.
Government Grants (both ways)
Capital Account transactions consist of the following:
1.
Direct Foreign Investments (both inward & outward)
2.
Investment in securities (both ways)
3.
Other Investments (both ways)
4.
Government Loans (both ways)
5.
Short-term investments on both directions
The substance of convertibility is to dispense with the discretionary management of foreign exchange and exchange rates and to adopt a more liberal and market driven exchange allocation process. All transactions are still conducted within the framework of exchange controls, as prescribed by the RBI. Full convertibility on current account is manifested as below:
*
On trade account and on account of the receipt side of the invisibles, the rupee is fully convertible at market determined exchange rates
*
The payment side of the invisible and receipts and payments of capital account are subject to exchange control.
*
However, exchange rates for all these permissible transactions are undertaken at the free market exchange rates.
Capital Account is deemed convertible when residents and non-residents are allowed to effect such transactions without any restrictions i.e. without prior permission of the RBI. In such a context without any restrictions Indians should be able to secured foreign direct investment from abroad. Foreigners at their discretion should be able to make portfolio investments in this country. Presently these transactions are subject to prior permission of R.B.I. However R.B.I. is following a constructive and promotional approach and encouraging foreign investments in India. Indian Industrialist having good projects for direct foreign investment or foreign institutional investors desiring to make portfolio investments in this country are encouraged and they do not face problems on account of exchange control by R.B.I. Exchange control is limited to exchange monitoring.
Source: http://www.geocities.com/kstability/index.html
The Prime Minister did not specify a time frame. That has been left to an expert committee appointed by the RBI under the chairmanship of S. S. Tarapore. It is expected that the committee will take four months to submit its report and a road map. Hence there is no reason at all to rush to a conclusion that full convertibility of the rupee is round the corner.
It is important to note that full convertibility is a gradual process, given our present state of integration with the outside world.
Current account
There has already been a substantial relaxation of foreign exchange controls: the rupee has been convertible on the current account since 1994. Resident Indians and companies now have access to foreign exchange for a variety of purposes, including education and travel. They can receive and make payments in foreign currencies on trade account.
Full convertibility means that restrictions on capital account too will be withdrawn. This basically implies that domestic assets — real estate and shares — can be sold to foreigners and payments received without previous regulatory clearance. There will also be a corresponding right for foreigners — not just non-resident Indians — to invest in Indian assets.
Earlier moves
Already there have been substantial moves in the direction of full convertibility. The stock markets have been fuelled by foreign money, which comes in through registered institutional investors. Many categories of resident Indians have been allowed to open foreign currency accounts abroad. India companies have been making overseas acquisitions for which they have given generous access to foreign currency resources.
In practice there can never be a situation where capital moves across national borders totally unhindered by controls. Full convertibility implies fewer but not a complete dismantling of controls. Even developed countries such as the U.S. restrict investments in specific sectors. In India too, it has never been easy even for non-resident Indians (who have enjoyed substantial capital account convertibility for long) to acquire property and real estate. Then again in India, there are caps on foreign direct investment (FDI). It is fanciful to think that all these will be scrapped to permit unrestricted capital flows only to prove that a full convertibility regime has arrived.
Monitoring remittances
Recent steps to check money laundering and the necessity to verify customers' credentials (Know Your Customer rules) have forced banks to monitor remittances into the country. There is no way a full convertibility regime can dispense with those.
One relevant point missed out in the debate over convertibility is this: whether the rupee is convertible or not depends as much on outsiders' preference to hold the currency as on the willingness of the national monetary authorities to "let go". Simply stated, it is not enough if the RBI decrees that the rupee is convertible. There must be demand for the rupee from a variety of legitimate sources — those engaged in trade, investment and so on. Part of the requirements for the rupee need not even be for India-specific transactions.
Debt market needs depth
And demand implies adequate supply of the currency and the infrastructure to cope with the new full convertible status. There should be an active rupee market outside India, a bond market and a facility to hedge rupee transactions over long time frames.
At present there is a felt need within India for a debt market with depth. The latest budget has increased the cap on FII investment in debt securities but compared to the booming equity markets the debt market in India is unlikely to attract anywhere near the same levels of foreign investment even if the rupee becomes convertible on capital account too.
Pertinently, the rupee, although an approved currency in the invoicing of imports and exports, is far less popular compared to the hard currencies, especially the dollar.
Don't ignore the flip side
It is also possible that speculators will take larger bets on the rupee in a full convertibility regime. In fact there are far too many points against full convertibility, even if it could be achieved in the near future.
The exchange rate policy in India, involving a managed float, has been emulated by many other developing countries. It has ensured reasonable stability of the exchange rate and to the extent possible discouraged speculative activity. A full convertibility regime would automatically lead to an exchange rate system in which the rupee will float freely against other currencies.
The benefits claimed — a free flow of capital both ways (to and from India) optimising returns to investors and giving a major boost to the financial markets — are realisable only if all imperfections, not only in India but also in the developed countries, are removed.
Far more likely, there will not only be increased volatility — inevitable perhaps even in the present system of a managed float — but financial instability. As the Indian economy gets more connected with the outside world, it will not be possible to insulate it from outside shocks. Full convertibility, implying no restrictions whatsoever on the movement of currency and capital, is the end result of globalisation. It might be a statement of economic confidence but the path towards it has to be well considered. Needless to add, full convertibility will be beneficial only if the domestic economy is put in good shape first. The expert group working on a roadmap will surely stress the same points favouring macroeconomic consolidation which an earlier committee — also under Mr. Tarapore — had set out in May 1997.
It is worth recapitulating its recommendations if only to show that the path towards convertibility cannot be as smooth as it is assumed. Second, since the major goals set in 1997 (to be reached over the next three years) have not been reached even now, it is evident that there cannot be a compressed time frame.
The Hindu. (C. R. L. NARASIMHAN)
Historical Issues for Convertability
In the year 1990-91 balance of payments position facing the country became critical and foreign exchange reserves had been depleted to dangerously low levels. Imports had to be severely curtailed in the course 1990-91 because of shortage of foreign exchange. Importers were asked to deposit an amount equal to 200% of the L.C. value with Banks in advance to be eligible for getting the L.Cs opened. This affected the availability of many essential items and also led to distinct slow down of industrial growth.
The urgent need of the hour was assessed as under:-
1.
To aim at quick revival of the momentum of exports.
2.
To create strong incentives to economise on imports, without resorting to proliferation of licensing controls, which promote delay and inefficiency, generate arbitrariness and stifle enterprise.
3.
There was urgent need to create an environment free from Bureaucratic controls in which our exporters will be able to respond with speed and flexibility to changing international conditions.
4.
To recognise the change that is taking place in the world economy, where countries are shedding isolation ands getting increasingly integrated, and to shape our economic policies as part of the prevailing global environment.
Government announced an initial package of trade policy reforms on 4th July 1991. Its main features are as under:
1.
Essential imports such as POL and fertilizers were fully protected.
2.
Import of other raw materials and components were linked to export performance through an enlargement and restructuring of the replenishment licensing system.
3.
A tradeable Exim Scrip allowing for free foreign exchange for import of goods up to 30% of the F.O.B. export value was allowed to exporters. These scrips were freely tradable in the open market, which fetched about 30% premium to the exporters.
4.
Government abolished cash compensatory support for exporters.
5.
Licensing complexities were reduced.
6.
In view of procedural anomalies the Exim Scrip system was subsequently withdrawn and Government announced partial convertibility of the rupee in the Central Budget for 1992-93 by way of a dual exchange system, which allowed conversion of 60% of the foreign exchange earnings at the rate determined in the foreign exchange market. The balance 40% foreign exchange was to be surrendered to the Reserve Bank at official exchange rate for financing of essential imports. The exporters were getting a rate equivalent to the weighted average of market rate (for 60%) and official rate (for 40%), while private imports were paid at market rates.
7.
Shortly thereafter in March 1992, the Government announced 100% convertibility on Current Account, under which 100% foreign exchange earnings can be converted at market rates.
After years of administered exchange rate full convertibility came to India. A fully convertible currency provides freedom to both residents and non-residents to trade in goods, services and assets, thereby, integrates the domestic economy into the world economy. Convertibility in current account along with trade liberalization measures are bound to enhance competitiveness of domestic tradables and make world prices to prevail in the domestic economy. Convertibility measures that accompany the easing of controls on foreign investment and capital inflows are expected to boost technology transfers and enhance productive growth of the domestic economic distortions of an otherwise inward looking trade regime.
The rupee convertibility process has thus been implemented since July 1991, involving several important elements as under:
1.
The relaxation of QR (Quantitative Restrictions) Regime involving import quotas and licensing.
2.
The reduction of the level and dispersions of import tariff rates
3.
The elimination of several export subsidization schemes;
4.
The liberalization of exchange restrictions on capital inflows, particularly the inflow the foreign direct and portfolio investments, and
5.
The introduction of market driven exchange rates of the rupee, instead of administered system through the mechanism of basket peg
Full convertibility of the currency does not prevent our discretion to protect our essential trade interests. Generally countries with currency convertibility have practiced various degree of controls to suit national interests from time to time. Full convertibility does not mean the unrestricted use of rupee for all types of external transactions. All transactions are still conducted within the framework of exchange controls, as prescribed by the R.B.I. On trade account and on account of the receipt side of the invisible, the rupee is fully convertible at market determined exchange rates. The payment side of the invisible and receipts and payment of capital account are subject to exchange control. However exchange rate for all these permissible transactions are undertaken at free market exchange rates.
- - - : ( o0o ) : - - -
2.Define "Convertibility"
In a strict sense a currency can be considered convertible, only if both residents and non-residents have full freedom to use and exchange it for any purpose whatsoever, at some definite rate of exchange. However in practice large number of currencies are considered convertible with various degrees of restrictions and controls.
The International Monetary Fund provides a working definition of convertibility under Article VIII, which states as under:-
“No member shall, without the approval of the fund, impose restrictions on making of payment and transfers for current transactions.”
The IMF concept considers convertibility only for current account transactions, thus leaving at the discretion of the country to regulate flows on capital account. Generally countries with currency convertibility have practised various degree of controls to suit their national interests from time to time. Thus currency convertibility implies absence of restrictions on foreign exchange transactions and not necessarily on trade or capital flow. This point has been clarified properly by IMF, which states as under:-
“Thus, although measure formulated as quantitative limitation on imports will have the indirect effect, it is not for that reason a restriction on payments within the meaning of the provision…Restrictions on trade do not become restrictions on payment within the meaning of Article VIII, because they are imposed for balance of payments reasons”.
Under the present floating system, exporters can realise their entire export earnings at the free market rate. All imports, including the Government imports consisting of petroleum, food, fertilizers and defence have to be paid at free market rates. The substance of convertibility efforts is to dispense with the discretionary management of foreign exchange and exchange rates and to adopt a more liberal and market driven exchange allocation process. It needs to be noted that here that the full convertibility does not mean the unrestricted use of the rupee for all types of India’s external transactions. All transactions are still conducted within the framework of exchange controls, as prescribed by the R.B.I.
The full convertibility features are LERMS (Liberalized Exchange Control Management System) and its main features are summarised as under:-
*
The exchange rates of the rupee are determined by the free market forces of demand and supply. Free market rates are quoted by authorised dealers (ADs).
*
Like any other market prices, the exchange rates both spot and forward can vary within a day, between days and even around medium term rend.
*
All commercial transactions in the current account and capital account are undertaken at the free-market driven rates, whether on government or private account.
*
Foreign exchange remittances abroad are subject to exchange control regulations although the AD can remit in many areas upto certain amounts without Reserve Bank’s permission. This implies full convertibility is not applicable to the invisible trade.
*
All export proceeds and inward remittances need to be surrendered with a 156% retention option in a foreign currency account with the AD.
*
The intervention currency continues to be U.S. dollar, which the Reserve Bank can buy and sell from and to the Ads at its discretion. This route can provide temporary stability in the exchange markets.
*
The Reserve Bank provides two way quotes of the U.S. Dollar, which can change several times in a day, depending on market pressures.
*
The Reserve Bank will not ordinarily buy or sell any other currency, either spot ort forward; rather will undertake swap transactions with the Ads. A swap involves the Reserve Bank buying the U.S. Dollar spot and selling forward simultaneously for delivery in two to six months.
*
The RBI will sell U.S. Dollars to the AD at the market rate, for debt service payments on Government Account and other payments, only a transitory arrangement, such as for meeting 40% value of imports under advance licences, special import licences, REP licences for import of raw materials, gems and jewellery exports, and for meeting the full value of imports under the outstanding EXIM scrips and such other licences treated on part with these scrips.
*
For trade with Russian Republics where the invoicing is in freely convertible currency the market related exchange rate are applicable.
*
Transactions routed through the ACU arrangement (except those settled in the Indian rupees) will be based on Reserve Bank’s rate for ACU currencies and for the Asian Monetary Unit.
- - - : ( o0o ) : - - -
3. What do you understand by the term “Current Account” and “Capital Account” Convertibility?
Current account includes all transactions, which give rise to or use of our National income, while Capital Account consist of short term and long term capital transactions.
Current Account Transactions covers the following.
1.
All imports and exports of merchandise
2.
Invisible Exports and Imports (sale/purchase of services)
3.
Inward private remittances to & fro
4.
Pension payments (to & fro)
5.
Government Grants (both ways)
Capital Account transactions consist of the following:
1.
Direct Foreign Investments (both inward & outward)
2.
Investment in securities (both ways)
3.
Other Investments (both ways)
4.
Government Loans (both ways)
5.
Short-term investments on both directions
The substance of convertibility is to dispense with the discretionary management of foreign exchange and exchange rates and to adopt a more liberal and market driven exchange allocation process. All transactions are still conducted within the framework of exchange controls, as prescribed by the RBI. Full convertibility on current account is manifested as below:
*
On trade account and on account of the receipt side of the invisibles, the rupee is fully convertible at market determined exchange rates
*
The payment side of the invisible and receipts and payments of capital account are subject to exchange control.
*
However, exchange rates for all these permissible transactions are undertaken at the free market exchange rates.
Capital Account is deemed convertible when residents and non-residents are allowed to effect such transactions without any restrictions i.e. without prior permission of the RBI. In such a context without any restrictions Indians should be able to secured foreign direct investment from abroad. Foreigners at their discretion should be able to make portfolio investments in this country. Presently these transactions are subject to prior permission of R.B.I. However R.B.I. is following a constructive and promotional approach and encouraging foreign investments in India. Indian Industrialist having good projects for direct foreign investment or foreign institutional investors desiring to make portfolio investments in this country are encouraged and they do not face problems on account of exchange control by R.B.I. Exchange control is limited to exchange monitoring.
Source: http://www.geocities.com/kstability/index.html
Friday, July 20, 2007
Words of Wisdom from the Gurus
Warren Buffett
Charlie Munger
John Templeton
Staley Cates, Mason Hawkins, and Andrew McDermott
Bill Ruane
Martin Whitman
Bruce Berkowitz
Charlie Munger
John Templeton
Staley Cates, Mason Hawkins, and Andrew McDermott
Bill Ruane
Martin Whitman
Bruce Berkowitz
We will only do with your money what we would do with our own - Warren Buffett(Memo to Shareholders 2001)
Friday, July 13, 2007
1900s
1919
- February 26 - An act of the United States Congress establishes most of the Grand Canyon as a United States National Park
- April 13 - At the Amritsar Massacre, British and Gurkha troops massacre 379 Indians
- May 23 - The University of California opens its second campus in Los Angeles
- May 29 - Einstein's theory of general relativity is tested/confirmed
- June 28 - The Treaty of Versailles is signed, ending World War I
1922
- February 28 - The United Kingdom accepts the independence of Egypt.
- March 18 - In India, Mohandas Gandhi is sentenced to six years in prison for sedition. He would serve only two years.
- November 14 - The British Broadcasting Corporation (BBC) begins radio service in the United Kingdom.
1923
- March 2 - Time Magazine hits newsstands for the first time.
1924
- February 4 - Mohandas Gandhi is released prematurely on medical grounds.
- February 14 - IBM corporation founded.
- Adolf Hitler begins dictating his book, Mein Kampf (or in English, My Struggle), while imprisoned in Bavaria.
- May 11 - Mercedes-Benz formed by the merging companies owned by Gottlieb Daimler and Karl Benz.
1925
- January 3 - Benito Mussolini (Il Duce) announces he is taking dictatorial powers over Italy.
- February 21 - The New Yorker magazine publishes its first issue.
- July 18 - Adolf Hitler publishes his personal manifesto Mein Kampf.
- October 30 - John Logie Baird creates Britain's first television transmitter.
- December 26 - The Sphinx was finally dug out in 1925, to the great pleasure of its numerous visitors.
1926
- November 11 - U.S. Route 66 was established.
1927
- January 7 - First transatlantic telephone call is made: New York City to London.
- April 7 - Bell Telephone Co. transmits an image of Commerce Secretary Hoover which becomes the first successful long distance demonstration of television.
- May 20 - Saudi Arabia becomes independent of the United Kingdom
1928
- November 6 - U.S. presidential election, 1928: Republican Herbert Hoover wins by a wide margin over Democrat Alfred E. Smith.
- December 21 - U.S. Congress approves the construction of The Boulder Dam, later renamed The Hoover Dam
- World population reached 2 billion people
1929
- January 2 - Canada and the United States agree on a plan to preserve Niagara Falls.
- January 10 - Tintin, a comic book character created by Hergé, makes his debut.
- February 18 - First Academy Awards are announced.
- February 26 - The Grand Teton National Park is established by Congress
- March 4 - Herbert Hoover is inaugurated as the 31st President of the United States, succeeding Calvin Coolidge.
- October 24 - The start of the Black Thursday stock market crash on the New York Stock Exchange
- October 29 - Black Tuesday stock market crash on the New York Stock Exchange
1930
January 26 - The Indian National Congress declares 26th January as Independence Day or as the day for Poorna Swaraj (Complete Independence).
March 2 - Mahatma Gandhi informs British viceroy of India that civil disobedience would begin nine days later
May 4/May 5 - Mahatma Gandhi is arrested again.
December 28 - Mohandas Gandhi leaves for Britain for negotiations.
December 29 - Sir Muhammad Iqbal's presidential address in Allahabad introduces the Two-Nation Theory and outlines a vision for the creation of Pakistan.
1931
January 25 - Mohandas Gandhi released again.
February 10 - New Delhi becomes the capital of India.
February 20 - California gets the go-ahead by the U.S. Congress to build the San Francisco-Oakland Bay Bridge.
March 4 - British viceroy of India and Mohandas Gandhi negotiate.
March 23 - Revolt for Independent India leaders Bhagat Singh, Rajguru and Sukhdev are hanged by the British Government.
May 1 - Construction of the Empire State Building is completed in New York City.
1932
1933
January 5 - Construction of the Golden Gate Bridge begins in San Francisco Bay.
January 28 - The word Pakistan for the first time in history comes into being and is recognized by the Pakistan Movement to press for freedom.
March 2 - The original film version of King Kong
March 4 - American President Herbert Clark Hoover is succeeded by Franklin D. Roosevelt, who in reference to the Great Depression, gives his "The only thing we have to fear, is fear itself" inauguration speech
March 12 - Great Depression: Franklin Delano Roosevelt addresses the nation for the first time as President of the United States. This was also the first of his "Fireside Chats".
May 8 - Mohandas Gandhi begins a 3-week hunger strike because of the mistreatment of the lower castes
May 18 - New Deal: President Franklin Delano Roosevelt signs an act creating the Tennessee Valley Authority.
June 5 - The U.S. Congress abrogates the United States' use of the gold standard by enacting a joint resolution (48 Stat. 112) nullifying the right of creditors to demand payment in gold.
October 17 - Albert Einstein arrives in the United States as a refugee from Nazi Germany.
November 8 - Great Depression: New Deal - US President Franklin D. Roosevelt unveils the Civil Works Administration, an organization designed to create jobs for more than 4 million of the unemployed.
1934
June 6 - New Deal: U.S. President Franklin D. Roosevelt signs the Securities Exchange Act into law, establishing the U.S. Securities and Exchange Commission.
December 27 - Persia becomes Iran
1935
March 16 - Adolf Hitler announces German rearmament in violation of the Versailles Treaty.
May 6 - New Deal: Executive Order 7034 creates the Works Progress Administration
August 14 - United States President Franklin Roosevelt signs Social Security Act into law.
September 30 - U.S. President Franklin D. Roosevelt dedicates Hoover Dam
1936
March 7 - In violation of the Treaty of Versailles, Nazi Germany reoccupies the Rhineland.
May 12 - The Santa Fe railroad in the United States inaugurates the all-Pullman Super Chief passenger train between Chicago, Illinois and Los Angeles, California.
November 3 - U.S. presidential election, 1936: Franklin D. Roosevelt is reelected to a second term in a landslide victory over Alf Landon.
November 12 - In California, the San Francisco-Oakland Bay Bridge opens to traffic.
1937
January 20 - Chief Justice Charles Evans Hughes swears in US. President Franklin D. Roosevelt for a second term. This is the first time Inauguration Day in the United States occurred on that date. It has occurred on January 20 ever since.
February 5 - President Franklin D. Roosevelt proposes a plan to enlarge the Supreme Court of the United States
May 27 - In California, the Golden Gate Bridge opens to pedestrian traffic creating a vital link between San Francisco and Marin County. The next day, President Franklin D. Roosevelt pushes a button in Washington, DC signaling the start of vehicle traffic over the Golden Gate Bridge.
July 22 - New Deal: The United States Senate votes down President Franklin D. Roosevelt's proposal to add more justices to the Supreme Court of the United States.
1938
January 27 - The Niagara Bridge at Niagara Falls, New York collapses due to an ice jam.
March 3 - Oil is discovered in Saudi Arabia.
February 24 - A nylon bristle toothbrush becomes the first commercial product to be made with nylon yarn.
October 16 - Winston Churchill, in a broadcast address to the United States, condemns the Munich Agreement as a defeat and calls upon America and western Europe to prepare for armed resistance against Hitler.
October 31 - Great Depression: In an effort to try restore investor confidence, the New York Stock Exchange unveils a fifteen-point program aimed to upgrade protection for the investing public.
1939
January 1 - The Hewlett-Packard Company was founded.
July 6 - Holocaust: The last remaining Jewish enterprises in Germany are closed
August 2 - Albert Einstein writes President Franklin Roosevelt about developing the Atomic Bomb using Uranium. This led to the creation of the Manhattan Project.
September 1 - WWII: Nazi Germany invades Poland, beginning the Second World War in Europe.'
October 11 - Manhattan Project: US President Franklin D. Roosevelt is presented with a letter signed by Albert Einstein urging the United States to rapidly develop the atomic bomb.
December 2 - La Guardia Airport opens for business in New York City.
Nuclear fission discovered independently by Lise Meitner and Otto Hahn.
1940
May 15 - McDonald's founded.
November 5 - U.S. presidential election, 1940: Democrat incumbent Franklin D. Roosevelt defeats Republican challenger Wendell Willkie and becomes the United States' first third-term president.
December 29 - Franklin D. Roosevelt, in a fireside chat to the nation, declares that the United States must become, "... the great arsenal of democracy."
December 30 - California's first modern freeway, the future California State Route 110, is opened to traffic in Pasadena, California, as the Arroyo Seco Parkway. It is now called the Pasadena Freeway.
1941
January 6 - Franklin Delano Roosevelt delivers his Four Freedoms Speech in the State of the Union Address.
November 17 - WWII: Attack on Pearl Harbor - Joseph Grew, the United States ambassador to Japan, cables the State Department that Japan had plans to launch an attack against Pearl Harbor, Hawaii (his cable was ignored).
December 7, December 8 (in Japan standard time) - Japanese Navy launches a surprise attack consisting of two full regiments on the United States fleet at Pearl Harbor, thus drawing the United States into World War II.
1942
February 9 - Daylight saving time goes into effect in the United States.
October 16 - Hurricane and flooding in Bombay - 40,000 dead.
1943
1944
WWII in full flow
1945
January 20 - Franklin D. Roosevelt is inaugurated to an unprecedented fourth term as President of the United States.
March 1 - Franklin D. Roosevelt gives what will be his last address to a joint session of Congress, reporting on the Yalta Conference
April 12 - United States President Franklin Delano Roosevelt (1933-1945) dies suddenly at Warm Springs, Georgia; Vice President Harry S. Truman (1945-1953) becomes the 33rd President.
May 2 - WWII: The Soviet Union announces the fall of Berlin.
July 21 - WWII: Harry S. Truman approves order for atomic bombs to be used.
September 2 - World War II ends: The final official surrender of Japan
October 24 - United Nations founded.
November 16 - Cold War: The United States controversially imports 88 German scientists to help in the production of rocket technology.
December 27 - Twenty-eight nations sign an agreement creating the World Bank.
1947
July 26 - Cold War: U.S. President Harry S. Truman signs the National Security Act into United States law creating the Central Intelligence Agency, Department of Defense, Joint Chiefs of Staff, and the National Security Council.
July 29 - After being shut off on November 9, 1946 for a refurbishment, ENIAC, one of the world's first digital computers, is turned on after a memory upgrade. It will remain in continuous operation until October 2, 1955.
August 15 - Following decades of Non violent resistance and periodic civil unrest from 1919, India gains independence from the British Empire
November 29 - The United Nations General Assembly votes to partition Palestine between Arabs and Jews.
1948
May 15 - 1948 Arab-Israeli War: Egypt, Transjordan, Lebanon, Syria, Iraq and Saudi Arabia attack Israel.
June 3 - Palomar Observatory telescope finished in California.
September 12 - Invasion of the State of Hyderabad by the Indian Army on the day after the Pakistani leader Jinnah's death to assist damage control. Operation Polo led to the deaths of an estimated tens of thousands of Hyderabadi Muslims.
1949
April 1 - The Tokyo Stock Exchange is founded.
October 1 - Birth of the People's Republic of China.
1950
January 26 - India promulgates its constitution forming a republic and Rajendra Prasad is sworn in as its first president.
February 12 - Albert Einstein warns that nuclear war could lead to mutual destruction
March 17 - University of California, Berkeley researchers announce the creation of element 98 which they have named "californium".
1952
May 13 - Pandit Nehru forms his first government
1953
January 7 - President Harry S. Truman announces the United States has developed a hydrogen bomb.
January 20 - Change of US presidency from Harry S. Truman (1945-1953) to Dwight D. Eisenhower (1953-1961).
August 8 - Soviet prime minister Georgi Malenkov announces that Soviet Union has a hydrogen bomb
October 30 - Cold War: US President Dwight D. Eisenhower formally approves the top secret document National Security Council Paper No. 162/2, which states that the United States' arsenal of nuclear weapons must be maintained and expanded to counter the communist threat.
1954
November 23 - The Dow Jones Industrial Average rises 3.27 points, or 0.86%, closing at an all-time high of 382.74. More significantly, this is the first time the Dow has surpassed its 1929 peak level reached just before that year's crash.
1956
October 31 - Suez Crisis: The United Kingdom and France begin bombing Egypt to force the reopening of the Suez Canal
1957
January 2 - San Francisco and Los Angeles stock exchanges merge to form Pacific Coast Stock Exchange.
January 20 - Dwight D. Eisenhower inaugurated for second term as President of the United States.
March 7 - Congress approves the Eisenhower Doctrine.
March 8 - Egypt re-opens the Suez Canal
March 25 - Treaty of Rome (patto di Roma) establishes the European Economic Community (EEC); see EU.
April 12 - United Kingdom announces that Singapore will gain self rule January 1, 1958.
July 29 - The International Atomic Energy Agency is established.
October 4 - Sputnik program: The Soviet Union launches Sputnik I, the first artificial satellite to orbit the earth.
October 31 - Toyota begins exporting vehicles to the U.S
December 6 - First U.S. attempt to launch a satellite fails, the rocket blowing up on the launch pad
1958
January 31 - The first successful American satellite, Explorer I, is launched into orbit.
February 1 - Egypt and Syria unite to form the United Arab Republic.
March 11 - U.S. B-47 bomber accidentally drops an atom bomb on Mars Bluff, South Carolina.
October 1 - NASA starts operations and replaces the NACA.
1959
February 19 - The United Kingdom grants Cyprus its independence.
1960
February 11 - Twelve Indian soldiers die in clashes with Chinese troops at their common border.
February 13 — Nuclear testing: France tests its first atomic bomb in the Sahara.
March 6 - Vietnam War: The United States announces that 3,500 American soldiers will be sent to Vietnam.
August 19 - Sputnik program: The Soviet Union launches Sputnik 5, with the dogs Belka and Strelka (Russian for "Squirrel" and "Little Arrow"), 40 mice, 2 rats and a variety of plants. The spacecraft returns to earth the next day and all animals are recovered safely
November 8 — United States presidential election, 1960: In a close race, John F. Kennedy is elected over Richard M. Nixon, becoming the youngest man elected to that office.
World population: 3,021,475,000
1961
January 20 - John F. Kennedy becomes the 35th President of the United States.
June 25 - Iraqi president Abdul Karim Kassem announces he is going to annex Kuwait.
October 30 - Nuclear testing: The Soviet Union detonates a 58 megaton yield hydrogen bomb known as Tsar Bomba over Novaya Zemlya. It remains the largest ever (man-made) explosion.
November 18 - U.S. President John F. Kennedy sends 18,000 military advisors to South Vietnam.
December 11 - The Vietnam War officially begins, as the first American helicopters arrive in Saigon along with 400 U.S. personnel.
December 17 - India occupies Goa.
December 31 - The Marshall Plan expires, after having distributed more than $12 billion in foreign aid to rebuild Europe.
1962
January 4 - New York City introduces a subway train that operates without a crew on board.
January 9 - Cuba and the Soviet Union sign a trade pact.
February 3 - The U.S. announces its trade embargo against Cuba.
September 21 - A border conflict between China and India erupts into fighting.
October 14 - Cuban Missile Crisis begins: A U-2 flight over Cuba takes photos of Soviet nuclear weapons being installed. A stand-off then ensues the next day between the United States and the Soviet Union, threatening the world with nuclear war.
November 1 - The Soviets begin dismantling their missiles in Cuba.
1971
August 15 - President Richard Nixon announces that the United States will no longer convert dollars to gold at a fixed value, effectively ending the Bretton Woods system. He also imposes a 90-day freeze on wages, prices and rents.
November 15 - Intel releases the world's first microprocessor, the Intel 4004.
December 18 - The U.S. dollar is devalued for the second time in U.S. history.
1973
February 13 - The United States Dollar was devalued by 10%.
March 29 - The last United States soldier leaves Vietnam.
October 17 - The Arab Oil Embargo against several countries which support Israel triggers the 1973 energy crisis.
December 23 - OPEC doubles the price of crude oil
1974
March 18 - Oil embargo crisis: Most OPEC nations end a 5-month oil embargo against the United States, Europe and Japan
January 26 - The Indian National Congress declares 26th January as Independence Day or as the day for Poorna Swaraj (Complete Independence).
March 2 - Mahatma Gandhi informs British viceroy of India that civil disobedience would begin nine days later
May 4/May 5 - Mahatma Gandhi is arrested again.
December 28 - Mohandas Gandhi leaves for Britain for negotiations.
December 29 - Sir Muhammad Iqbal's presidential address in Allahabad introduces the Two-Nation Theory and outlines a vision for the creation of Pakistan.
1931
January 25 - Mohandas Gandhi released again.
February 10 - New Delhi becomes the capital of India.
February 20 - California gets the go-ahead by the U.S. Congress to build the San Francisco-Oakland Bay Bridge.
March 4 - British viceroy of India and Mohandas Gandhi negotiate.
March 23 - Revolt for Independent India leaders Bhagat Singh, Rajguru and Sukhdev are hanged by the British Government.
May 1 - Construction of the Empire State Building is completed in New York City.
1932
1933
January 5 - Construction of the Golden Gate Bridge begins in San Francisco Bay.
January 28 - The word Pakistan for the first time in history comes into being and is recognized by the Pakistan Movement to press for freedom.
March 2 - The original film version of King Kong
March 4 - American President Herbert Clark Hoover is succeeded by Franklin D. Roosevelt, who in reference to the Great Depression, gives his "The only thing we have to fear, is fear itself" inauguration speech
March 12 - Great Depression: Franklin Delano Roosevelt addresses the nation for the first time as President of the United States. This was also the first of his "Fireside Chats".
May 8 - Mohandas Gandhi begins a 3-week hunger strike because of the mistreatment of the lower castes
May 18 - New Deal: President Franklin Delano Roosevelt signs an act creating the Tennessee Valley Authority.
June 5 - The U.S. Congress abrogates the United States' use of the gold standard by enacting a joint resolution (48 Stat. 112) nullifying the right of creditors to demand payment in gold.
October 17 - Albert Einstein arrives in the United States as a refugee from Nazi Germany.
November 8 - Great Depression: New Deal - US President Franklin D. Roosevelt unveils the Civil Works Administration, an organization designed to create jobs for more than 4 million of the unemployed.
1934
June 6 - New Deal: U.S. President Franklin D. Roosevelt signs the Securities Exchange Act into law, establishing the U.S. Securities and Exchange Commission.
December 27 - Persia becomes Iran
1935
March 16 - Adolf Hitler announces German rearmament in violation of the Versailles Treaty.
May 6 - New Deal: Executive Order 7034 creates the Works Progress Administration
August 14 - United States President Franklin Roosevelt signs Social Security Act into law.
September 30 - U.S. President Franklin D. Roosevelt dedicates Hoover Dam
1936
March 7 - In violation of the Treaty of Versailles, Nazi Germany reoccupies the Rhineland.
May 12 - The Santa Fe railroad in the United States inaugurates the all-Pullman Super Chief passenger train between Chicago, Illinois and Los Angeles, California.
November 3 - U.S. presidential election, 1936: Franklin D. Roosevelt is reelected to a second term in a landslide victory over Alf Landon.
November 12 - In California, the San Francisco-Oakland Bay Bridge opens to traffic.
1937
January 20 - Chief Justice Charles Evans Hughes swears in US. President Franklin D. Roosevelt for a second term. This is the first time Inauguration Day in the United States occurred on that date. It has occurred on January 20 ever since.
February 5 - President Franklin D. Roosevelt proposes a plan to enlarge the Supreme Court of the United States
May 27 - In California, the Golden Gate Bridge opens to pedestrian traffic creating a vital link between San Francisco and Marin County. The next day, President Franklin D. Roosevelt pushes a button in Washington, DC signaling the start of vehicle traffic over the Golden Gate Bridge.
July 22 - New Deal: The United States Senate votes down President Franklin D. Roosevelt's proposal to add more justices to the Supreme Court of the United States.
1938
January 27 - The Niagara Bridge at Niagara Falls, New York collapses due to an ice jam.
March 3 - Oil is discovered in Saudi Arabia.
February 24 - A nylon bristle toothbrush becomes the first commercial product to be made with nylon yarn.
October 16 - Winston Churchill, in a broadcast address to the United States, condemns the Munich Agreement as a defeat and calls upon America and western Europe to prepare for armed resistance against Hitler.
October 31 - Great Depression: In an effort to try restore investor confidence, the New York Stock Exchange unveils a fifteen-point program aimed to upgrade protection for the investing public.
1939
January 1 - The Hewlett-Packard Company was founded.
July 6 - Holocaust: The last remaining Jewish enterprises in Germany are closed
August 2 - Albert Einstein writes President Franklin Roosevelt about developing the Atomic Bomb using Uranium. This led to the creation of the Manhattan Project.
September 1 - WWII: Nazi Germany invades Poland, beginning the Second World War in Europe.'
October 11 - Manhattan Project: US President Franklin D. Roosevelt is presented with a letter signed by Albert Einstein urging the United States to rapidly develop the atomic bomb.
December 2 - La Guardia Airport opens for business in New York City.
Nuclear fission discovered independently by Lise Meitner and Otto Hahn.
1940
May 15 - McDonald's founded.
November 5 - U.S. presidential election, 1940: Democrat incumbent Franklin D. Roosevelt defeats Republican challenger Wendell Willkie and becomes the United States' first third-term president.
December 29 - Franklin D. Roosevelt, in a fireside chat to the nation, declares that the United States must become, "... the great arsenal of democracy."
December 30 - California's first modern freeway, the future California State Route 110, is opened to traffic in Pasadena, California, as the Arroyo Seco Parkway. It is now called the Pasadena Freeway.
1941
January 6 - Franklin Delano Roosevelt delivers his Four Freedoms Speech in the State of the Union Address.
November 17 - WWII: Attack on Pearl Harbor - Joseph Grew, the United States ambassador to Japan, cables the State Department that Japan had plans to launch an attack against Pearl Harbor, Hawaii (his cable was ignored).
December 7, December 8 (in Japan standard time) - Japanese Navy launches a surprise attack consisting of two full regiments on the United States fleet at Pearl Harbor, thus drawing the United States into World War II.
1942
February 9 - Daylight saving time goes into effect in the United States.
October 16 - Hurricane and flooding in Bombay - 40,000 dead.
1943
1944
WWII in full flow
1945
January 20 - Franklin D. Roosevelt is inaugurated to an unprecedented fourth term as President of the United States.
March 1 - Franklin D. Roosevelt gives what will be his last address to a joint session of Congress, reporting on the Yalta Conference
April 12 - United States President Franklin Delano Roosevelt (1933-1945) dies suddenly at Warm Springs, Georgia; Vice President Harry S. Truman (1945-1953) becomes the 33rd President.
May 2 - WWII: The Soviet Union announces the fall of Berlin.
July 21 - WWII: Harry S. Truman approves order for atomic bombs to be used.
September 2 - World War II ends: The final official surrender of Japan
October 24 - United Nations founded.
November 16 - Cold War: The United States controversially imports 88 German scientists to help in the production of rocket technology.
December 27 - Twenty-eight nations sign an agreement creating the World Bank.
1947
July 26 - Cold War: U.S. President Harry S. Truman signs the National Security Act into United States law creating the Central Intelligence Agency, Department of Defense, Joint Chiefs of Staff, and the National Security Council.
July 29 - After being shut off on November 9, 1946 for a refurbishment, ENIAC, one of the world's first digital computers, is turned on after a memory upgrade. It will remain in continuous operation until October 2, 1955.
August 15 - Following decades of Non violent resistance and periodic civil unrest from 1919, India gains independence from the British Empire
November 29 - The United Nations General Assembly votes to partition Palestine between Arabs and Jews.
1948
May 15 - 1948 Arab-Israeli War: Egypt, Transjordan, Lebanon, Syria, Iraq and Saudi Arabia attack Israel.
June 3 - Palomar Observatory telescope finished in California.
September 12 - Invasion of the State of Hyderabad by the Indian Army on the day after the Pakistani leader Jinnah's death to assist damage control. Operation Polo led to the deaths of an estimated tens of thousands of Hyderabadi Muslims.
1949
April 1 - The Tokyo Stock Exchange is founded.
October 1 - Birth of the People's Republic of China.
1950
January 26 - India promulgates its constitution forming a republic and Rajendra Prasad is sworn in as its first president.
February 12 - Albert Einstein warns that nuclear war could lead to mutual destruction
March 17 - University of California, Berkeley researchers announce the creation of element 98 which they have named "californium".
1952
May 13 - Pandit Nehru forms his first government
1953
January 7 - President Harry S. Truman announces the United States has developed a hydrogen bomb.
January 20 - Change of US presidency from Harry S. Truman (1945-1953) to Dwight D. Eisenhower (1953-1961).
August 8 - Soviet prime minister Georgi Malenkov announces that Soviet Union has a hydrogen bomb
October 30 - Cold War: US President Dwight D. Eisenhower formally approves the top secret document National Security Council Paper No. 162/2, which states that the United States' arsenal of nuclear weapons must be maintained and expanded to counter the communist threat.
1954
November 23 - The Dow Jones Industrial Average rises 3.27 points, or 0.86%, closing at an all-time high of 382.74. More significantly, this is the first time the Dow has surpassed its 1929 peak level reached just before that year's crash.
1956
October 31 - Suez Crisis: The United Kingdom and France begin bombing Egypt to force the reopening of the Suez Canal
1957
January 2 - San Francisco and Los Angeles stock exchanges merge to form Pacific Coast Stock Exchange.
January 20 - Dwight D. Eisenhower inaugurated for second term as President of the United States.
March 7 - Congress approves the Eisenhower Doctrine.
March 8 - Egypt re-opens the Suez Canal
March 25 - Treaty of Rome (patto di Roma) establishes the European Economic Community (EEC); see EU.
April 12 - United Kingdom announces that Singapore will gain self rule January 1, 1958.
July 29 - The International Atomic Energy Agency is established.
October 4 - Sputnik program: The Soviet Union launches Sputnik I, the first artificial satellite to orbit the earth.
October 31 - Toyota begins exporting vehicles to the U.S
December 6 - First U.S. attempt to launch a satellite fails, the rocket blowing up on the launch pad
1958
January 31 - The first successful American satellite, Explorer I, is launched into orbit.
February 1 - Egypt and Syria unite to form the United Arab Republic.
March 11 - U.S. B-47 bomber accidentally drops an atom bomb on Mars Bluff, South Carolina.
October 1 - NASA starts operations and replaces the NACA.
1959
February 19 - The United Kingdom grants Cyprus its independence.
1960
February 11 - Twelve Indian soldiers die in clashes with Chinese troops at their common border.
February 13 — Nuclear testing: France tests its first atomic bomb in the Sahara.
March 6 - Vietnam War: The United States announces that 3,500 American soldiers will be sent to Vietnam.
August 19 - Sputnik program: The Soviet Union launches Sputnik 5, with the dogs Belka and Strelka (Russian for "Squirrel" and "Little Arrow"), 40 mice, 2 rats and a variety of plants. The spacecraft returns to earth the next day and all animals are recovered safely
November 8 — United States presidential election, 1960: In a close race, John F. Kennedy is elected over Richard M. Nixon, becoming the youngest man elected to that office.
World population: 3,021,475,000
1961
January 20 - John F. Kennedy becomes the 35th President of the United States.
June 25 - Iraqi president Abdul Karim Kassem announces he is going to annex Kuwait.
October 30 - Nuclear testing: The Soviet Union detonates a 58 megaton yield hydrogen bomb known as Tsar Bomba over Novaya Zemlya. It remains the largest ever (man-made) explosion.
November 18 - U.S. President John F. Kennedy sends 18,000 military advisors to South Vietnam.
December 11 - The Vietnam War officially begins, as the first American helicopters arrive in Saigon along with 400 U.S. personnel.
December 17 - India occupies Goa.
December 31 - The Marshall Plan expires, after having distributed more than $12 billion in foreign aid to rebuild Europe.
1962
January 4 - New York City introduces a subway train that operates without a crew on board.
January 9 - Cuba and the Soviet Union sign a trade pact.
February 3 - The U.S. announces its trade embargo against Cuba.
September 21 - A border conflict between China and India erupts into fighting.
October 14 - Cuban Missile Crisis begins: A U-2 flight over Cuba takes photos of Soviet nuclear weapons being installed. A stand-off then ensues the next day between the United States and the Soviet Union, threatening the world with nuclear war.
November 1 - The Soviets begin dismantling their missiles in Cuba.
1971
August 15 - President Richard Nixon announces that the United States will no longer convert dollars to gold at a fixed value, effectively ending the Bretton Woods system. He also imposes a 90-day freeze on wages, prices and rents.
November 15 - Intel releases the world's first microprocessor, the Intel 4004.
December 18 - The U.S. dollar is devalued for the second time in U.S. history.
1973
February 13 - The United States Dollar was devalued by 10%.
March 29 - The last United States soldier leaves Vietnam.
October 17 - The Arab Oil Embargo against several countries which support Israel triggers the 1973 energy crisis.
December 23 - OPEC doubles the price of crude oil
1974
March 18 - Oil embargo crisis: Most OPEC nations end a 5-month oil embargo against the United States, Europe and Japan
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