Indian millionaires to see 405 pct rise in wealth by 2020: Delloite
AGENCIES
Posted: Thursday, Aug 18, 2011 at 0951 hrs IST
Mumbai: India is likely to experience a whopping 405 per cent growth in total millionaire wealth by 2020, mainly driven by new wealth generators such as investments, salary income, equity stakes and new business, according to research firm Delloite.
Emerging markets will see a significantly higher growth rate in millionaire households compared to developed markets with India likely to experience the largest growth in millionaire wealth (405 per cent) among the BRIC nations, Deloitte (India) Head Financial Services Sachin Sondhi said in a release here.
India will be followed by China, which is poised to see millionaire wealth grow at 394 per cent, followed by Brazil at 257 per cent and Russia at 241 per cent by 2020, he said. The four emerging markets make up the BRIC grouping.
"While some of the wealth creation in India will be continue to be driven by 'old wealth' drivers like real estate, family business, a.
sizeable portion is expected to come from the 'new wealth' drivers like investment, salary income, equity stakes, new business, etc," Sondhi said.
According to the report, the growth in millionaire wealth in India is expected to vary across different wealth cohorts.
The USD 5 million-30 million cohort will see the greatest growth at 161 per cent, while the USD 1 million-5 million cohort and USD 30 million-plus cohorts will follow closely with likely growth rates of 142 per cent and 115 per cent, respectively, over the next decade, Delloite said.
"India may have the lowest density ranking in 2020 with only 0.3 per cent of households holding more than USD 1 million in wealth, potentially followed by China and Poland. While India ranks lower than other BRIC nations in average density, the total estimated millionaire households are expected to be in the range of 0.69 million millionaire (MM)," Sondhi said.
Delloite, however opined that the explosive growth will impact the wealth ecosystem on both the demand and the supply side. "This would affect the service providers that directly serve the wealthy such as wealth managers, private bankers and financial planners and the players who depend on this population's spend proclivity such as luxury brand retailers, real estate developers and experiential travel and living providers," Sondhi said.
"Broadly, the big question for the ecosystem players is to determine where they should place their bets and how much of an influencing role they want to play in shaping the market.
It would be interesting to observe how these players accommodate the rural and semi-urban millionaire segment and also, how financial planning would and advice models change to cater to the needs of this new wealth segment and what investment and product options will be needed to address changing needs," he said.
Currently, top one per cent of Indian wealthy households have 35 per cent of their investment in residential real estate, the release said.
Death Cross rocks Wall Street
AGENCIES
Posted: Saturday, Aug 20, 2011 at 1300 hrs IST
New York: Before the stormy trading of August, many stock investors probably thought "death cross" was the name of some heavy metal band.
But after a period in which the S&P 500 plunged more than 15 per cent, daily trading volumes spiked by 70 per cent and the United States lost its vaunted 'triple-A' rating, a death cross and other technical analysis terms are something investors have had to become increasingly familiar with.
For chartists and market technicians, the death cross is a strong bearish signal that indicates a major shift in trading momentum.
In the case of the S&P 500, a death cross occurs when the 50-day average for the index sinks below, or crosses over, its 200-day average.
There was a time on Wall Street when many regarded technical analysis as something akin to voodoo economics, especially among stock pickers who specialized in fundamental research. But with algorithimic trading all the rage, it appears that cold and dispassionate technical market analysis is coming of age.
The recent market plunge which took the S&P 500 to about 1,100 is a prime of example of why more traders are looking to technical analysis for guidance. That's because many computer-driven trading programs are pegged to buy and sell stocks when certain market levels are breached.
"Computers fire off automatically; you don't have the time lag you'd have in normal decision making," says Marc Pado, US technical market strategist at Cantor Fitzgerald & Co. "Clearly this is not stock picking (but) indiscriminate buying and selling."
Pado says the selling all started when the S&P 500 broke through the 200-day moving average and a support level of 1,250 on the index. He says, "that started the capitulation to the downside that we saw in the market overall."
The beauty (or flaw) of technical analysis is that it tells traders when to buy or sell without regard to corporate earnings or arguments over how to solve Europe's sovereign debt woes. So the silver lining of a precipitous drop in stocks is that it could be a signal for markets to go up.
"By selling off, the market is now discounting the bad news," said Carter Worth, chief market technician at Oppenheimer & Co in New York.
Another factor technical analysis focuses on is volatility and there has been a lot of that lately. In fact, one measure of volatility doubled in three days and on Aug. 8, when the S&P 500 fell 6.66 per cent, the volatility index closed at its highest level since the market bottomed in March 2009.
"It highlights how extreme, how one-sided it was," said Craig Peskin, co-head of technical analysis research at MF Global in New York, who noted that every stock in the S&P 500 declined on Aug. 8. "Everyone was treating everything equally."
Some likened what they were seeing in the market to last year's flash crash, when the Dow Jones Industrials plunged nearly 1,000 points in 20 minute. Except this time, it appears to be a flash crash in slow motion.
"We were moving over a three and a half day period like we were during the flash crash, just more orderly," Peskin said. "It was totally irrational."
In fact, the week of Aug. 8 was so extreme it even left some technical analysts scratching their heads at the unusual up and down trading. On Aug. 9, stocks roared back, with the S&P 500 gaining 4.74 per cent and almost wiping out the prior day's losses. Meanwhile, the Dow industrials would experience six days trading in swings of more than 400 points.
"I don't have an exact answer on how to label that pattern from a technical perspective because the volatility was so extreme," said MF Global's Peskin.
Many market participants say this volatility is not going to go away. It is a new normal that makes technical analysis a key rule of the game - even if some dismiss it as market astrology and don't want to play.
There are also new opportunities, if traders have the stomach and the correct analysis tools -- and know how to use them.
"High-frequency traders are moving the markets based on price action, based on momentum - they don't really care what they're trading," said Bill Stone, chief strategist for PNC Wealth Management.
"They don't care about intrinsic value, they care about some pattern. So you have days like last week where you get whipsawed 5 and 6 per cent from day to day," he said. "Those days can be scary, but they are also your opportunity because they are driving (lower) companies that have no reason to be falling so far."
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