tag:blogger.com,1999:blog-19649274.post1411081787811727978..comments2024-03-27T17:16:12.789+05:30Comments on The Leap Blog: It's the private corporate investment, stupidAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-19649274.post-16457118605216404122010-05-07T17:48:10.923+05:302010-05-07T17:48:10.923+05:30takethetimes@gmail.comtakethetimes@gmail.cominvestment solutionshttp://www.uniconindia.in/noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-84040954796367059582009-07-11T19:14:37.435+05:302009-07-11T19:14:37.435+05:30Ajay,
I do not mean to detract from the importanc...Ajay,<br /><br />I do not mean to detract from the importance of private investment as a driver of growth for India, but find it hard not to be skeptical about using the level of the stock market index as a proxy for business confidence. If <a href="http://en.wikipedia.org/wiki/Tobin's_q" rel="nofollow"><i>Tobin's q</i></a> is such an important investment driver, how do you explain the fact that it has spent most of the last century below 1.0 for the US market taken as whole? It appears to me that it the lags the investment cycle and is at best an indicator of how overheated the stock market is at any given time...Harikrishna Rhttps://www.blogger.com/profile/12578993443302248580noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-59794564122651936482009-07-11T07:29:58.349+05:302009-07-11T07:29:58.349+05:30The way the market behaves also depends on what le...The way the market behaves also depends on what level they are on. The sharp run up in the first half of the year means that the markets were long over due for correction. <br /><br />As far as fiscal deficit goes, if we can control the leakage, the money spent on infra and other public goods will serve us well for sure.Manshuhttp://onemint.comnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-91939268386612175762009-07-10T21:25:22.591+05:302009-07-10T21:25:22.591+05:30Devendra, I'm emphasising a simple point. CEOs...Devendra, I'm emphasising a simple point. CEOs and entrepreneurs care about the Q or the price/book ratio which measures the reward to successful business-building.<br /><br />If spending Rs.100 on building a cement factory gets you a valuation of Rs.200, lots of people will try to build a cement factory. If spending Rs.100 on building a cement factory gets you a valuation of Rs.100 upon success (which is not certain) then nobody's going to build a cement factory.<br /><br />I'm emphasising the relationship between this "Q" and the decisions of CEOs, entrepreneurs, private equity funds, etc., in choosing investment projects worth implementing.Ajay Shahhttps://www.blogger.com/profile/03835842741008200034noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-22262782780967624852009-07-09T22:06:03.960+05:302009-07-09T22:06:03.960+05:30Devendra Nevgi said :
Hi Ajay, Been a follower of...Devendra Nevgi said :<br /><br />Hi Ajay, Been a follower of your blog for a while now. I had a few points here :<br /><br />1. There has been considerable debate on impact of asset prices on the real economy and subsequently private investments, globally and in India. And yes confidence and animal spirits are important in driving private investment. Its unfortunate if Indian CEOs make higher investments when stock markets are at its peak, may be due to lower cost of say equity. Like Indian govt did not trigger off serious fiscal consolidation when Tax/GDP ratio was higher in earlier years.<br /><br />2. I do agree with your views in past that monetary transmission in India is weak and the fiscal multipliers are smaller as India integrates globally and savings ratio remains higher. Further leakages within the system are higher too. I am not sure if the Ricardian Neutrality principle works in India in times of higher fiscal defecit.<br /><br />3. Tobin Q in US has been a fair long term indicator over or undervalued businesses. <br />But are Indian Balance Sheets fully mark to market to arrive at a fair replaceable value. ?<br /><br />Thanks And RegardsDevendra Nevgihttps://www.blogger.com/profile/14912765129251377764noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-8835220487558465602009-07-09T16:35:34.048+05:302009-07-09T16:35:34.048+05:30I always thought lower interest rates (expansionar...I always thought lower interest rates (expansionary monetary policy) was the way to go if private investment needed propping up - especially if rates are not yet close to zero, and currency strength is not a priority.Duke Nukemnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-43322874716850520982009-07-09T14:37:43.244+05:302009-07-09T14:37:43.244+05:30Good basic point, ignore the deficitGDP ratio and ...Good basic point, ignore the deficitGDP ratio and its cahnges, focus upon getting investment going. How best to do this? I suspect more Sotonomics type policies are called for: implementing repeal of ULCRA, streamlining legal processes for housing, especially Nano ones etc.Vivek Moorthy, IIMBnoreply@blogger.com