(Bloomberg) — India is showing nascent signs of reversing a troubling trend as private investment picks up, aided by improving consumption and softening inflation, data show.
“I am cautiously optimistic about growth with some signs of gradual, though uneven, revival of consumption demand,” said Jayanth Rama Varma, an external member of India’s monetary policy committee. A modest increase in private capital spending is counted on to support the recovery, he said in an interview earlier this month.
Private investment in physical assets, including infrastructure, holds the key to sustaining India’s world-beating growth as fiscal room to boost spending remains limited. Investment has been on a decline for more than a decade as companies waited for durable demand and policy stability.
Businesses ramping up capacity as domestic demand recovers indicates early signs of a turnaround.
“A recovery in private capex is underway” as investments in infrastructure, manufacturing and technology services have picked up, Morgan Stanley economists led by Chetan Ahya wrote in a recent report, noting the growth in private projects under implementation has risen to a 10-year high of 9.2% at the end of June.
At the same time, capacity utilization of manufacturing firms has risen to a three-year high of 75% in three months to March, surpassing the pre-pandemic levels of 69.9% recorded during the January-March quarter two years ago, suggesting plans are being drawn for fresh investment.
The share of private sector proposal for new investments jumped to nearly 91% in April-June quarter, up from 78% during the previous quarter, data from the Centre for Monitoring Indian Economy Pvt. cited by rating company CareEdge showed.
Gross domestic product data due Aug. 31 will show how gross fixed capital formation — a proxy for investment — grew in April-June.
Output of capital goods — physical assets used by businesses to produce goods and services — has risen by double digits for three straight months after a slump in most part of the last two years. The strongest performance among the components of factory output helped the overall index perform better than expectations in June.
“We will get back to pre-pandemic level,” said Kamal Nandi, business head and executive vice president at Godrej Appliances. “Demand for appliances will go up and I think all brands have accordingly planned their expansions on capacity.”
Still, some companies are waiting for clear signs of lasting demand and the easing of supply chains impacted by the war in Ukraine and Covid-19 lockdowns in China. “The industry is yet to solve the disrupted supply chain challenges leading to shortages of key inputs,” said Shankar Raman, chief financial officer at Larsen & Toubro Ltd., India’s engineering conglomerate.
Bank credit increased 14.5% from a year earlier as of July 29, more than double the growth it saw a year ago. Some of it may have been fueled by higher working capital requirement, but “it is also a reflection of improved investment demand,” CareEdge said in a note.
Businesses in Asia’s third largest economy want to see price pressures ease some more to spur demand. Retail inflation cooled to a five-month low in July and further moderation is seen ahead. Car sales rose for a second straight month in July, indicating improving demand.
“Ultimately it is strength of demand conditions and its long-term stability which matter,” said Gaurav Kapur, Chief Economist of IndusInd Bank Ltd.
©2022 Bloomberg L.P.
Top 3 investment bets for millennials to beat market volatility and make money – Economic Times
There is a thrill for many to do things that are so-called out of the ordinary. As mentioned in the first part of this story, millennials are the impatient investor class who are all up to ignore the stereotypes, bet even on riskier investments.
On that note, in the first part we talked about three new-age investments that go beyond the ordinary for the millennials or the digital natives. To know more about millennials and more about the investment options, you can read the first part here:
Top 3 new-age investment bets for millennials looking to take risk and earn big
Nonetheless, it is never bad to be cautious. A roller coaster ride is fun at the amusement parks but when it comes to using the hard-earned money, no one will be keen to lose their savings. It is often said volatility is the daily crux of the market. Experts also opine it can be a motivation to capitalize on the imbalances.
“Volatility is the ghost that haunts you only if you look at it. The best way to avoid volatility is to ignore it; don’t trade into a market when there’s euphoria or out of it when there’s panic. Instead, constrict and hold a diversified portfolio for the long term, or better still, a mutual fund, which isolates individuals from volatility shocks,” Utkarsh Sinha, managing director at boutique investment bank firm Bexley Advisors said.
The economy too is at a volatile juncture with slower-than-expected growth recovery and galloping inflation. For stocks, the plausibility of earnings growth is diluting and valuation is said to trade below the long-term average. So, what could be better than to have some safe options even during a volatile period, enjoy the thrills of new-age investments and still achieve the monetary goals?
Girirajan Murugan, the chief executive officer at FundsIndia, lists more instruments that will help millennials to avoid some volatility:
InvIT – Infrastructure Investment Trust
This involves a trust channeling investments from individuals/institutions toward infrastructure projects. In a developing country like ours, the demand for good infrastructure is huge and perennial, in my opinion, Murugan said, adding that an investment in an InvIT with a good management will be a fruitful investment for the long term.
However, most infrastructure projects are subject to government regulations and interference. Change in the political space could affect such investments. Lack of choices to choose from is a severe disadvantage. Being a budding avenue, the participation in this investment is comparatively low. This means that selling them in the current market could be difficult. However, if the market for this type of investment takes off, then this concern will be void.
REIT – Real Estate Investment Trust
Similar to InvITs, REITs pool resources to invest in real estate assets. “Real estate investment has not lost its flair even today, despite being a conventional investment. That’s exactly why I’d like to call this a “grandfather-approved investment,” Murugan said.
By enabling part ownership, REIT has made real estate more accessible for all sections of people. REIT investments buy you ownership to the property in question, proportionate to the investment made. The income from this asset shall also follow the same proportion.
There are 2 categories of REIT – tradable and non-tradable. Some non-tradable REITs disclose the share values only after 18 months. Non-tradable REITs also carry the disadvantage of less liquidity.
ESG (Environmental, Social and Governance) Investing
In this mode, the investment is directed toward the development of businesses that toil for the betterment of the world. One can either invest through readily available ESG Mutual Funds, or they can identify the right companies and invest in their stocks.
“As far as ESG investing is concerned, it’s a thumbs up from me, and I say this from an ethical standpoint. The reason is that a good planet and a harmonious society are something we can’t survive without. When it boils down to it, man will eventually be forced to choose survival over profitability. If you choose to do it for the purpose, rather than for profitability, this may be one of your best investments,” Murugan said.
ESG assets are on track to exceed $53 trillion by 2025 and represent more than a third of the $140.5 trillion in projected total assets under management (AuM), according to Bloomberg Intelligence.
Bexley Advisors’ Sinha said millennials are at the best point of their lives currently to invest, as they have the bulk of their lives ahead of them. With these options explained, the millennials perhaps have better insight on the options available. Remember how we introduced the generations in the first part of the story and talked about an angry young man from Bollywood? Well, keep the swag and invest with prudence.
How rising interest rates impact insurers' investment decisions – Canadian Underwriter
Recent interest rate hikes aimed at curbing inflation, and the potential for more rate hikes next year, has the insurance industry keeping an eye on its investment returns.
But while the transition from a low-interest-rate environment to a higher-rate environment will create short-term challenges, it also creates a long-term opportunity, noted Gord Dowhan, CFO at Wawanesa Insurance in a recent Canadian Underwriter interview.
“Over time…higher interest rates can create an opportunity for us to increase our yield moving forward,” Dowhan said. “As bonds mature, it gives us the opportunity to invest at a higher rate.
“You’ve seen this experience in Europe and elsewhere, where they were at zero percent and negative interest-rate environments in some cases. Having higher rates is healthier than being in that environment [of extremely low or negative interest rates], and there’s definitely an opportunity for us to pick up yield and investment returns within our investment portfolio as those instruments mature.”
For an insurer’s portfolio, Dowhan noted a rising interest rate environment makes certain investment instruments more attractive. And his firm has some of these in place, including preferred shares, limited recourse capital notes, and floating-rate or variable-rate debt.
“We’re also looking at real estate and infrastructure investments. From a rate-reset, preferred-share perspective, this gives us the opportunity to increase our yield; the dividend yield resets regularly based on five-year government bond yields,” he said.
“In a rising rate environment, this gives us an opportunity to increase our returns. Floating-rate, or variable-rate, debt has become increasingly attractive as rates rise. We’ve invested in and will continue to invest in floating-rate debt and look for opportunities to grow our portfolio there.”
What’s more, Dowhan said that during high inflationary periods, real estate and infrastructure tend to outperform other asset classes.
“The underlying instruments within these products, leases and other revenues that produce revenue streams linked to inflation, is one reason why they typically outperform other asset classes during periods of high inflation,” he told CU. “So, opportunities exist for us to enhance our yield in the long term and continue to deliver value for our policyholders.”
This article is excepted from one that appeared in the August-September issue of Canadian Underwriter. Feature image by iStock.com/porcorex
Landa Sees More Growth, EPac Gets New Investment And More | Label and Narrow Web – Label & Narrow Web Magazine
Demonstrating its commitment to supporting its growing customer base and interest from future customers, Landa Digital Printing is aggressively expanding its global team and business development infrastructure with the appointment of several new sales professionals.
New Landa appointments include:
- Bill Lawver, Inside Sales Representative
- Michael Weyermann, Regional Sales Manager – Northeast
- Steve Smith, Regional Sales Manager – Southeast
- Danny Green, Regional Sales Manager – Mideast
- Michelle Weir, Regional Sales Manager, Southwest
Sharon Cohen, chief business officer, Landa Digital Printing, comments, “We are delighted to have secured the talent and experience of Bill, Michael, Steve, Danny and Michelle. Their highly relevant backgrounds will be instrumental in supporting our growth plans across North America, while also supporting the wider team to ensure continued high customer satisfaction, innovation and success.
Meanwhile, Amcor has announced a further strategic investment of up to $45 million in ePac Flexible Packaging. The investment will increase Amcor’s minority shareholding in ePac Holdings LLC.
Amcor’s executive vice president of strategy and development, Ian Wilson, comments, “This additional investment reflects our confidence in ePac’s entrepreneurial team and their proven ability to rapidly scale in the high growth, often higher value short run segment. Since our initial investment last year, we have been deeply impressed with ePac’s focused and innovative business model centered around deploying a very high level of digitalization and customization. ePac’s proven digital technologies enable the delivery of exceptional service levels and significantly reduced lead times. These specializations are designed to meet the unique speed to market and service needs of locally based small to medium customers, skill sets that are highly transferable to areas of Amcor’s core business.
Here are the highest-trafficked news items for the week ending on September 23:
1. Landa announces five senior additions to NA sales team
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4. Mondi invests in new research and development center in Germany
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