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On Slack: SEBI scrutiny, Bond Spreads, High-Frequency Traders, E-Pharmacies, Textile Stocks and more….

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The Slack Discussions

The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there, pop us a note by replying to this email. (If you’re a trial member this probably sound like Greek to you; it will be available when you sign up!)

A brief summary of some of the interesting things discussed there in the last few days:

SEBI_Mutual_fund_12July

#fixed-income: Fixed-income funds under Sebi scrutiny after huge outflows

Mutual funds’ financial manoeuvring, popularly known as “river crossing” in industry parlance, may be a thing of the past as the market regulator has started looking into daily trade data, including those on certificates of deposit, of fund houses.

River crossing, or parking or holding period return, is a rampant practice that takes place mostly at the financial year end when mutual funds connect with cash-rich entities to tide over redemption pressure. Regulators normally consider the practice imprudent since it raises investor risk. (Link)

#general: Bond Spreads’ Golden Cross & the Fed Obstacle

Not all obstacles to a Fed hike are located outside of the US. The escalation in high yield corporate bond spreads to three-year highs resulting from plunging energy prices has worsened the debt profile of several oil & gas companies, to the extent that oil prices have become more instrumental fueling bond spreads than interest rates.  With treasury yields on the rise and high yield spreads following closely behind, even a modest Fed hike would have a not-so modest impact on the sustainability of debt financing in oil and gas as well as the suppliers dependent upon on them. (Link)

#general: Here’s Why It’s So Easy to Manipulate Ordinary Investors

Manipulation

That quote is a key theme in Phishing for Phools: The Economics of Manipulation & Deception by George Akerlof and Robert Shiller. The authors, two of America’s leading economists, note that free markets are capable of generating unimaginable wealth and innovation. And yet, this system also “tends to spawn manipulation and deception.” Because the goal of every business person is to get you to spend your money, they will often come up with ingenious ways of tricking you. This frequently results in consumers choosing things that aren’t very good for them. (Link)

#general: India’s drug stores plan protest against e-pharmacies

As many as 850,000 small chemist shops in India will shut for a day next week to protest against a burgeoning online pharmacy industry that is attracting big money backers.

Healthcare provider Apollo Hospitals Enterprise Ltd plans to start online drug sales in India, while Zigy, and Sequoia Capital-backed 1mg already have e-pharmacies to tap a retail market IMS Health says is worth about $13 billion. (Link)

#general: Precious metals could be bottoming

For the first time since the precious metals topped in 2011, both the Silver and Gold charts are constructing possible bottom configurations.

The monthly Gold chart displays the bear trend that began with the completion of a major descending triangle in April 2013. (Link)

14micky

#general: 50 Richest Indians in the GCC

Micky Jagtiani has topped the first ever listing of  the GCC’s 50 Richest Indians, published by Arabian Business today.

The Landmark Group founder – who once worked as a London cab driver – has an estimated wealth of $4.5bn. Jagtiani took pole position ahead of food magnate  Feroz Allana on $4.3bn, with legendary Dubai-based investor Ragu Kataria third on $2.5bn. The top five was completed with EMKE Group’s Yussuf Ali on $2.2bn, and BR Shetty on $1.9bn.

The list featured a total of ten billionaires, with the top 50 between them worth $40.2bn. The average wealth of the top 50 came in at $1.57bn. (Link)

HFT-1

#general: Why Do High-Frequency Traders Cancel So Many Orders?

The issue of high-frequency traders who cancel a lot of their orders seems to have bee
n in the news a bit recently, so let’s kind of reason it out from first principles. (Link)

#general: Flipkart Big Billion Days: New Sale, Same Problems?

Flipkart Big Billion Days Sale seemed to get off to a rocky start Tuesday midnight, as the e-commerce giant’s website and app looked to be struggling to cope up with the heavy traffic, a scenario that was reminiscent of last year’s Big Billion Sale. Irate customers took to Twitter to complain about the Flipkart Big Billion Days Sale almost as soon as the sale kicked off.(Link)

#general: Now Even Billionaire Narayana Murthy Of Infosys Is Charmed By Textile Sector & Buys Chunk Of Prof Sanjay Bakshi’s Fav Textile Stock

Marquee names like Dolly Khanna, Ashish Kacholia, Anil Kumar Goel, Kenneth Andrade, Porinju Veliyath etc have bought treasure troves of stocks like Nandan Denim, RSWM, Welspun Syntex, KPR Mills, Kitex Garments, Himatsingka Seide etc on the expectation that the textile sector in India will do extremely well owing to the slowdown in China. (Link)

Sewing background with color threads, meter and scissors

#stocks: NHB to launch over 80 new housing finance companies

In line with the Centre’s ambitious plan to provide housing for all by 2022, Delhi-based National Housing Bank (NHB) is gearing up to spawn 80 new housing finance companies (HFCs). The focus will be on financing affordable houses.

The idea is mooted by Sriram Kalyanaraman, the new managing director and chief executive of NHB. Kalyanaraman moved to NHB in July from Mumbai-based credit information bureau Equifax Credit Information Services. (Link)

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Disclaimer

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Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.

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