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2015Major Events (Business & Others)
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Agenda
US economy
Eurozone
Emerging Markets
China
Oil and other commodities
Startup boom
Unstable geopolitical situation
Indian banking sector
M&A
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U.S. Economy
Growth ~2%
Lower oil – higher spending / initially higher savings
Consumer demand due to improved labour market
Unemployment 5% Wages 2.5%
Strengthening dollar
FED increased interest rates – finally
further strengthening of currency
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Eurozone crisis
European Union
Currency union but no fiscal union
Grexit!!
Government spending, Current account balance, Tax evasion, Misreported debt stats
3rd bailout (~total euro 215 bl )
Ireland (property bubble), Portugal (public finances), Spain (housing bubble) and
Cyprus (exposure to greece)
Possible solution – Exit from Eurozone?Career Launcher
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Emerging Markets
BRICS, MINT, N-11, CIVETS
No specific definition based on growth just developing nations
Asian economic crisis of 1997
Hot money
US interest rates rise – Alan Greenspan
China, Brazil and Russia
India
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China Economy
Debt to GDP
Bad debt – Official 1.5%. Estimates 6%-21%
Growth rate 6.9%
6 rates cuts!!
Lowered reserve requirement!
Currency devaluation
Factors
Over Capacity, low wages and consumer demand
Deflation
Credit crunch
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Brent Crude Why?
Shale Oil – production doubled
Price War
Weak demand
Dissipating geopolitical fears
What?
Good for consumers in US and Europe
Oil drilling company cuts jobs ~300K
Consolidation (Halliburton - Baker Hughes)
Russia – 17% interest rate, Venezuela – 60% inflation
Petrocurrency How low?
RBS - $16
SCB - $10
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Falling Commodity Prices
25% down in 2015
Cotton was the only gainer
Mining stocks like iron ore, copper and nickel had a
terrible year
Gold – Actually low?
Oil
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Startup Boom
2015 - increasing challenge of startups and new tech on entrenched industries
On-Demand cab services - transforming transportation
Electric cars – Tesla
Self driving cars – Google, Apple, All car manufactures
Media spend continued to increase in favour of digital
Sectors ranging from healthcare and financial services are seeing the rise of
threatening new upstarts.
Internet-of-things
Breakthrough years also predicted for wearables, 3D printing and virtual reality
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Unstable Geopolitical Situation
The simmering unrest between Ukraine and Russia, the conflict in Syria, and
the violent rise of groups such as Boko Haram and Islamic State have created
a climate of insecurity which have been exacerbated by events such as the
recent Charlie Hebdo attack in France. There is also a growing concern about
what effect the plunge in oil prices will have on states dependent on oil for
the bulk of their revenues, from Venezuela to Nigeria to Russia.
At the same time, the canvas for potential conflicts is much changed from a
quarter of a century ago with rising technological risks, notably cyber-attacks,
and new economic realities,
However, the Iran-P5+1 deal, China’s One Belt One Road initiative, ASEAN
Free Trade Agreement, the Trans-Pacific Partnership were significant positives
that did much to better the global environment.
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India Banking Industry
Public (27), private(30), foreign(40), regional rural(196), urban
cooperative(~50), rural cooperative
2 new banking licences
Payments bank(11) – deposits , lending
Growth
Deposits & Lending ~ 20% CAGR. 2015?
NPA
India 2.7% in 2010 to 4.45% in 2015
BRICS ~3%
US, UK, JAPAN, Australia ~1-2%
Regulatory requirements
CRR,SLR,ALM
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Basel
Herstatt Bank
BCBS under Bank of International Settlements (BIS)
Basel I, Basel II and Basel III
Basel III
Capital adequacy requirements
Leverage ratio
Liquidity requirement (LCR)
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Mergers & Acquisitions 4.9 trillion dollars mergers
Higher markets – stock deals , cheaper debt
Acquiring Target ~Billion USD
Pfizer Allergan 191
AB InBev SABMiller 120
Shell BG 81
Charter Communications Time Warner 78
Dow Chemical DuPont 68
Dell EMC 66
Energy Transfer Williams 56
Heinz Kraft 55
Anthem Cigna 48
eBay Paypal 47
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