Global oil demand to ease back in 2016: International Energy Agency

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According to the International Energy Agency, global oil demand is expected to ease back considerably in 2016. “Having peaked, at a five-year high of 1.6 million barrels per day (mb/d) in 2015, global oil demand growth is forecast to ease back considerably in 2016, to 1.2 mb/d, pulled down by notable slowdowns in Europe, China and the United States,” the newly released IEA Oil Market Report  (OMR) for February says. As per the report, global oil supply dropped 0.2 mb/d to 96.5 mb/d in January, as higher OPEC output only partly offset lower non-OPEC production. Non-OPEC supplies slipped 0.5 mb/d from a month earlier to stand close to levels of a year ago. For 2016 as a whole, the report says, non-OPEC output is expected to decline by 0.6 mb/d, to 57.1 mb/d. OPEC crude oil output rose by 280 000 barrels per day in January to 32.63 mb/d as Saudi Arabia, Iraq and a sanctions-free Iran all turned up the taps. Supplies from the group during January stood at nearly 1.7 mb/d higher year-on-year, says the IEA.

India’s Budget:Pro-growth, but no bold effects

Prima facie, the Union budget for the fiscal 2011 fails to address macroeconomic problems like risks from high crude oil prices and rising current account deficit though it offer partial relief to the common man overburdened with spiraling food and oil prices.

Amidst high oil prices, increasing inflationary pressure and scandals galore, Pranab Mukherjee, India’s Finance Minster presented today the Union budget for the financial year 2011-12 in the Lok Sabha. While India Inc has welcomed the budget saying that it is a growth-oriented one, industry captains are of the view that Finance Minister should have given more stress to the health sector and the demand for treatment of healthcare as infrastructure has been overlooked.

The FM duly recognized that the principle concern before the government is high food prices, especially cereals. He highlighted three challenges which will continue to engage the Indian policy-planners for the next few years. These include, sustaining GDP growth rate of 9%, making development more inclusive and strengthening transparency and public accountability.

It is time that Indian policy makers should embark on to renovate the struggling agriculture sector so as to control rising food prices, as the economy fighting with the highest inflation than any leading Asian economy. Critics warn that India need to invest far more in agriculture to boost productivity and enlarge storage facilities to help reduce the spiraling prices of fruit and vegetables.

Highlights of the Budget

Positives

• Current surcharge of 7.5% on domestic companies proposed to be reduced to 5%
• Higher exemption limit of Rs 5,00,000 for very senior citizens, who are 80 years or above
• Allocation to Sarva Shiksha Abhiyan increased by 40% to Rs 21,000 crore
• Excise duty to be reduced from 10% to 5% on parts of specified machinery
• Surcharge for companies cut to 5%, from 7.5%
• Senior Citizen Age Limit reduced from 65 years to 60 years for Income Tax purposes. Citizens over 80 years to have exemption limit of Rs 5 lakh
• Special incentives for hybrid vehicle makers if manufacturing done in India to be positive for auto companies
• Crude palm used in sports exempted from customs duty to be positive for palm oil companies
• Duty reduced on hybrid & electric cars along with batteries imported for such vehicles
• Basic customs duty on agricultural machinery reduced to 4.5% from 5%
• MFs allowed to raise money from foreign investors  
• Tax exemption limit for senior citizens raised to Rs 2.5 lakh from 2.4 lakh

Disappointments

• Central Excise Duty enhanced from 4% to 5%
• AC restaurants serving liquor to come under service tax net
• Health Check-Ups in Private hospitals to become expensive
• Air travel to cost more
• Tax on life insurance service providers could be negative for insurance companies
• Travel, Healthcare to become expensive due to increased service tax
• New service tax on hospitality
• Branded clothes may cost more

Jany, Chief Economist

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Gold Prices – Poised for a fall?

The yellow metal is seen as a safe invest against runaway inflation and a falling US dollar. However, skeptics concern that the yellow metal has gone too high, too fast and a serious correction could be round the corner.

From the time when the global financial crisis started (2007), gold continued its safe heaven status for many people. During the last couple of years, real estate stagnated and most currencies lost their value, while the prices of gold rose to the sky and became a favorite among the investment community. Now with the emerging signs of inflation creeping in, the yellow metal even becoming more admired as investors reflect on safety and looking for the best way to hedge against inflation.

It is well known fact that during the times of war, falling currencies and inflationary pressures, gold is always the popular safe haven. Thus the yellow metal is not only a currency for the elite, but it actually holds real worth, unlike the US paperback dollar whose value can fluctuate as wildly as we have seen during the last couple of years.

But on the other hand, skeptics feel that the yellow metal has gone too high, too fast and a serious correction could be round the corner. We have seen global bullishness of the yellow metal in 2010 – as prices soared 30% from January 2010 to their December peak. But as prices dissipated in recent weeks, analysts say the short-term deliberate interest has turned more negative towards gold driven by improved sentiment on the US economy recovery and the concerns over euro zone sovereign debt abating. Amidst this, analysts at Citi rated their gold price outlook downside with sings of the past three years’ risk-trade frittering away and as resilience is apparently restored in the developed markets.

Nevertheless, turmoil in Egypt would not have come at a better time for gold. Moreover, the growing demand from Chinese New Year celebration (the largest consumers of late) and growing geopolitical risk has provided a new support.  The US-based Donald Trump, the largest high profile investors who openly argues his bullish outlook on gold and strongly condemns US policies said in an interview recently, “I think gold will go up as long as people don’t have confidence in our president and our country. And they don’t have confidence in our president.”

Analysts foresee that a bit of downward pressure in the near term, but as economic woes continue to drive investors into safe-haven and thus the prices of yellow metal will be headed higher in 2011. However, think a while, is the latest gold craze is way overcooked? It remains to be seen whether the yellow metal may loose some of its appeal as a safe heaven in 2011.

Jany, Lead Economist

Chindia: Inflation & Asset Bubble - Double Trouble

Inflation and growing asset bubbles are the two top most concerns facing the two biggest economies in Asia.

China and India have emerged strongly from the global financial crisis than any other economy in the world. However, the two Asian giants are facing increasing public dissent due to inflationary pressures, especially in housing and food. In China, worrying property prices are the top most concern. Housing prices in major Chinese cities soared by more than a fifth in 2010. This has raised doubts about the effectiveness of tough monetary measures announced by the central bank during 2010.

In India’s case, its prime worry is the runaway food inflation which stood at 15.5% in December 2010, the highest of any major economy in Asia; though China is not far off at 9%. To add to that, India’s widening current account deficit threatens to dent the overall confidence in the economy. According to RBI’s latest report on the economy, the foreign direct investment (FDI) in India fell by more than a third from April to September 2010. During this period, FDI stood at $12.6 billion, a 36% decline compared to the first half of the previous fiscal. The sectors that witnessed the sharpest declines were in the construction, mining and business-services sectors which appear to have affected the investors' sentiments due to hurdles in environmental clearances, problems in land acquisition and lack of availability of quality infrastructure.

Source: RBI

Though both countries have been raising interest rates to avoid crimping strong economic growth, yet the corporate sector in both the countries feel that governments are not doing enough to sustain the growth momentum. According to Matt Robinson, Senior Economist at Moody's Analytics, “Public discontent is emerging in Asia's largest emerging economies, India and China, threatening to derail the region's growth prospects.” 

Economists add that India's structural problems are likely to make it less attractive. Besides, increasing inflationary pressure is creating a lack of business confidence. They suggest that Indian government needs to step up reforms to avoid further declines. Mumbai-based Sujan Hajra, Chief Economist at Anand Rathi Financial Services says that FDI stands as the most preferred form of capital inflow which India wants. Declining FDI should be an area of concern for policy makers going ahead.

Sony's Next Generation Portable to take on rivals

Sony Corp which is battling for growth in the portable gaming segment, thanks to the huge popularity of Apple’s iPad and rising game apps by developers is now intensifying the competition by launch of its new device “NGP” — Next Generation Portable, which will take on not only iPad and other android powered tablets from Toshiba to Motorola Droid, but is also pitted against the proprietary gaming devices like Industry leader Nintendo’s DS.

The new device has been packaged with new features that are only available on tablets like Wi-Fi, 3G compatibility but also full touch 5-inch OLED screen and motion sensing technologies that make it a hit among young gamers.

According to VGChartz.com, Nintendo Wii scores as the most popular gaming device wordwide. Now with Sony's new NGP launching new titles like Hot Shots Golf Next, Gravity Daze, Killzone, WipeOut, Resistance, LittleBigPlanet, Uncharted, Little Deviants, Reality Fighters the segment is set for a fierce competition.

The price of the new device is still not out but is expected to be on sale this holiday season in Japan

Have a look at the hardware specs:

• CPU: ARM Cortex-A9 core (4 core)
• GPU: SGX543MP4+
• External Dimensions: Approx. 182.0 x 18.6 x 83.5mm (width x height x depth) (tentative, excludes largest projection)
• Screen: 5 inches (16:9), 960 x 544, Approx. 16 million colors, OLED
• Touchscreen: Multi-touch screen (capacitive type)
• Rear touchpad: Multi-touch pad (capacitive type)
• Cameras: Front camera; rear camera
• Sound: Built-in stereo speakers; built-in microphone
• Sensors: Six-axis motion sensing system (three-axis gyroscope, three-axis accelerometer); three-axis electronic compass
• Location: Built-in GPS; Wi-Fi location service support
• Keys/Switches: PS button; power button; directional buttons (Up/Down/Right/Left); action buttons (Triangle, Circle, Cross, Square); shoulder buttons (Right/Left); right and left sticks; Start button; Select button; volume buttons (+/-)
• Wireless communications: Mobile network connectivity (3G); IEEE 802.11b/g/n (n = 1x1) (Wi-Fi) (Infrastructure mode/Ad-hoc mode); Bluetooth 2.1+EDR (A2DP/AVRCP/HSP)

Source: www.gamrfeed.vgchartz.com, www.sony.com

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