LILA RAJIVA: The Mind-Body Politic
Individuals Not Ideologies
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Soros Says Eight More Years Before Next Crash
George Soros sings the siren song of “government,” while admitting that government is the problem: (more…)
Soros To Buy Stake In Bombay Stock Exchange, Goldman Seeks Commercial Banking License in India
Palak Shah at the Business Standard :
“US micro hedge fund legend George Soros and the world’s third biggest philanthropist George Kaiser are in the race to acquire close to 4 per cent in the Bombay Stock Exchange (BSE), Asia’s oldest stock exchange.
Soros has bid for the BSE stake, held by the embattled Dubai Financial Group LLC, through Soros Fund Management LLC, and Kaiser has done so through private equity fund, Argonaut.
Other investors who have bid for BSE stake include New York-based private equity majors J C Flowers and Caldwell Investment, promoted by Toronto investment broker Thomas Caldwell. Caldwell is a specialist investor in stock exchanges and bought 4.3 million shares of the New York Stock Exchange in 2006. Sources added that a private equity fund has bid Rs 370 for each share, valuing BSE at over Rs 3,800 crore. Avendus Capital is advisor to the deal.
Dubai Financial, part of sovereign fund Dubai Holding, holds 3.92 per cent stake in BSE, which it bought when the exchange was demutualised in 2007. BSE was then valued at Rs 3,780 crore. While BSE and Avendus could not be reached for comment, sources familiar with the developments said Dubai Financial felt the exchange deserved a higher valuation in the current situation.
In the recent past, the valuation of the exchange saw a sudden spurt after a new management team took over in 2009.
While some stock brokers sold BSE shares at around Rs 180 a piece some six months ago, a bank auctioned 0.27 million shares at Rs 320 a couple of months ago.
Under the new management, BSE changed its derivative trading cycle to compete with the National Stock Exchange, launched a mutual fund trading platform and is upgrading its technology platform. BSE currently has a near 28 per cent share of the equity spot market in the country and has been making efforts to develop its derivative trading segment, where National Stock Exchange is a monopoly player. BSE will launch currency derivatives in May and is also in the process of increasing its stake in Central Depository Services Ltd to 51 per cent.
Currently, six foreign investors hold 25.65 per cent of BSE and five Indian institutions hold 12 per cent.
A little under 62 per cent of BSE’s shares are widely held. Among the key Indian shareholders are firms such as Bajaj Holdings and Investment, which owns 2.94 per cent, Infosys Technologies CEO and MD S. Gopalakrishnan, who owns 1.04 per cent and media major Bennett, Coleman and Co, which owns 1.04 per cent.
BSE recently announced 12 bonus shares for every share held and the exchange currently has around Rs 2,000 crore of cash reserves, which translates into cash per share of at least Rs 190.
BSE posted a net profit of Rs 55.42 crore on revenue of Rs119.21 crore for the quarter ended December 2009.”
The launching of the mutual fund platform and the upgrading of the technology and expansion of derivative trading is exactly what Goldman Sachs introduced into the New York Stock Exchange in the 1990s. And we saw what happened in the 15 years following. And Goldman is in India, currently seeking a commercial banking license to operate there.
With the same players around (Soros, Goldman Sachs etc. ), there’s no reason to believe that what’s coming up for the Bombay Stock Exchange won’t take the same direction. Before the financial crisis, the Indians had little exposure to the highly levered derivatives and toxic debt that blew up the system elsewhere. Let’s see whether this upcoming round they’ll be as lucky. With economies stagnant elsewhere, Asia and some select African countries are the only places where there’s actual economic growth occurring.
I’m afraid the same handful of corrupt players will game the system there…
More here at The Economic Times:
“His hedge fund Quantum, which was reported to have posted earnings of over 30% last year, went on a buying- spree at a time, when most funds were dumping stocks in a sliding market. On July 4, Quantum Fund bought a 3.8% equity in Jain Irrigation Systems, and close to 1% of the holding of Jai Corp for a value consideration of Rs 167 crore. Since February, the fund has made investments valued at close to Rs 600 crore, or $ 140 million, in various companies, including Indiabulls Financial Services, Indiabulls Real Estate and Kalindee Rail Nirman. Quantum’s selective stock picking comes at a time, when institutional investors have been pulling out a large chunk of money amid concerns over a combination of factors such as weak global markets, soaring global oil prices and spiraling inflation in India. “Hedge funds normally are active, when there is some momentum in the market. Quantum may be trying to do some value-buying, but one has to see how long the fund stays invested, given the prevailing uncertain market conditions,” said a stock-broker..”
Remember Formula K (or, the First Law of Kleptocracy) :
s(B) + s(G) + s(S) v. EE where ’s’ is always a positive integer
Some (s) of the big banks (B - eg. JP Morgan, Goldman Sachs, Citi etc.)
+
Some parts of government (G - eg. parts of the SEC/Treasury/Fed Reserve Chairman, IMF, World Bank etc.)
+
Some hedge-funds and speculators (S - eg. Soros, Paulson (?), Loeb, Cohen and others reportedly involved in manipulation and collusion with government)
Versus
Every one else (EE)
Soros: Gold In Bubble; But Keep Stimulus Going…..
Always nice to see people talk out of both sides of their mouth.
Here is currency speculator George Soros (ex of legendary hedge-fund Quantum) at the World Economic Forum at Davos:
“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.”
So far so good. Mis-price money (cheap interest rates) and people don’t want to keep their savings in it. They want it in something that isn’t subject to mis-pricing (so they hope) - hence gold.
But then Soros shows how disingenuous he’s being by adding this:
“I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the US and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that.”
That is, he’s suggesting running more deficits and keeping the money spigot going, just the thing that’s caused the gold price to rise.
So how do we understand this?
Gold is due for a technical correction, but it’s also probably responding to deflation in the general economy. It’s not going down that fast, because a lot of people are also buying it speculatively.
That’s the tug of war.
Meanwhile, who know what Soros’ holdings are and who knows what his motivations are in making such contradictory statements.
But anyone who takes these sorts of pronouncements as any kind of lead for their own investments/speculations, should be prepared to part fairly soon from their money.
Lanka Needs Soros Like A Hole In The Head
“In 1992, Soros earned the epithet “the man who broke the Bank of England” by demanding the Bank to raise its interest rates or to float the currency (so that he could make more money). The Bank did neither. He retaliated by selling “short” more than $10 billion worth of pound sterling, forcing the Bank of England to depreciate the pound: Soros amassed an estimated US$ 1.1 billion in the process.
The Conscience Of A Speculator
December 20, 1998: an exchange between George Soros and Steve Kroft on “60 Minutes”:
“Kroft: “You’re a Hungarian Jew …”
Soros: “Mm-hmm.”……Kroft: “My understanding is that you went … went out, in fact, and helped in the confiscation of property from the Jews.”
Soros: “Yes, that’s right. Yes.”
Kroft: “I mean, that’s—that sounds like an experience that would send lots of people to the psychiatric couch for many, many years. Was it difficult?”
Soros: “Not, not at all. Not at all. Maybe as a child you don’t … you don’t see the connection. But it was—it created no—no problem at all.”
Kroft: “No feeling of guilt?”
Soros: “No.”
Kroft: “For example, that, ‘I’m Jewish, and here I am, watching these people go. I could just as easily be these, I should be there.’ None of that?”
Soros: “Well, of course, … I could be on the other side or I could be the one from whom the thing is being taken away. But there was no sense that I shouldn’t be there, because that was—well, actually, in a funny way, it’s just like in the markets—that is I weren’t there—of course, I wasn’t doing it, but somebody else would—would—would be taking it away anyhow. And it was the—whether I was there or not, I was only a spectator, the property was being taken away. So the—I had no role in taking away that property. So I had no sense of guilt.”
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