Frontier Research

CUSTOMISED GLOBAL NEWS SUMMARY

Markets Rise on Hopes Fed Will Act

20th June 2012

Executive Summary:
U.S. stock indexes on Tuesday finished at five-week highs after upbeat housing data, as the Federal Reserve considered further moves to stimulate the economy. The S&P 500 Index rose 1% the Dow Jones Industrial Average closed up 0.8%. A Spanish debt auction that yielded results deemed slightly better than expected drove a stocks rally in Madrid and delivered relief more broadly for European markets. The Stoxx Europe 600 index gradually ticked higher during the day and closed up 1.6%. Brent August crude fell 29 cents to settle at $95.76 a barrel. An article in today's summary takes a look at 'Why India has failed' to provide prosperity for all and points to its exploitative institutions that are a carry over from the colonial age. Sri Lanka's own institutions are largely relics of that same age and it is interesting to note the similarities between the attitudes the upper classes of Sri Lanka and India have when it comes to the dual issues of equality and poverty.

News Summary:
Asian Market Update
Asian stocks gained, with the regional benchmark index heading for its highest close in a month, as investors speculated central banks from the U.S. to China may announce more stimulus measures to boost growth in the worlds largest economies. The MSCI Asia Pacific Index climbed 0.6 percent to 116.41 as of 9:09 a.m. in Tokyo, with about 13 shares rising for each that fell. Read More- bloomberg.com

European and North American Market Update

Dow: 12,837.3, +96 Nasdaq: 2,929.8, +34 S&P 500: 1,358.0, +13 Markets enjoyed a nice rally, led by strength in financials and a rumor that Angela Merkel would allow the EFSF to buy distressed sovereign debt. The Fed began a two day meeting today, with the Federal Open Markets Committee scheduled to release a key policy decision tomorrow. While Wall Street expects the central bank to leave headline interest rates unchanged at 0.25 percent, The number of new job openings in the U.S. fell more than eight percent month-on-month to 3.416 million in April, new data out of the Bureau of Labor Statistics shows. Economists had expected the number to fall to 3.685 million from 3.741 million a month earlier. Greek coalition government is expected to be formed by midday tomorrow, missing earlier expectations for that to occur today. PASOK leader Evangelos Venizelos told reporters today that his party would "sincerely" support the coalition, but that left-wing party Syriza would not participate in the negotiations. His comments were supported hours later by statements from Democratic Left leader Fotis Kouvelis, who said his party would back the coalition. a number of analysts see the Fed offering some form of stimulus or easing.

 The euro shot higher this afternoon after EU leaders pared back an amendment that would have forced companies to rotate credit agencies frequently. The news sent the euro as high as $1.2706, before retreating. Read More- businessinsider.com

Oil Market Update

Brent crude edged lower on Tuesday on relief that negotiations to defuse the dispute over Iran's nuclear program led to plans for technical talks in July, while hopes for more monetary stimulus from the Federal Reserve helped lift U.S. crude. Brent August crude fell 29 cents to settle at $95.76 a barrel, after slumping to $94.44, the lowest intraday price since Jan. 10, 2011.Brent has retreated more than 25 percent from its 2012 peak above $128 a barrel struck in March. U.S. July crude rose 76 cents to settle at $84.03, having traded from $82.28 to $84.41 ahead of the July contract's expiration on Wednesday. Read More- reuters.com

Gold Update
Gold prices fell on Tuesday for the first time in eight days as buyers stayed on the sidelines ahead of a U.S. Federal Reserve policy meeting that could signal new monetary stimulus, a move that would likely power the metal's recent rally. Spot gold was down 0.5 percent at $1,620.31 an ounce by 3:04 p.m. EDT (1904 GMT). Prior to Tuesday, the metal had gained around 3 percent during its seven-day winning streak. Read More- reuters.com

Economic and Market Views:

Why has India failed?
The demand for unpleasant truths is very low and therefore there is not much in terms of supply. The market for any truth consequently is very thin. Thats one of the reasons that the Why is India poor? question does not get much play. The other reason is that the people in power dont want it highlighted because the answers may lead to their undoing. If people actually figured out the real reason for Indias poverty, it would create a very unhealthy atmosphere for those at the top who are running the whole show. They depend on popular ignorance for their continued survival. Writers and speakers generally dont want to get on the wrong side of those in power. You cannot blame them for it can be very bad for ones health, not just ones reputation. India was poor because its system of governance was exploitative and extractive. The British created the exploitative system and it was as good a system as can be for their purposes. The British were evidently good how else would they have ruled so many people for as long as they did. Rule Britannia and all that sort of thing, ol chap. India was not particularly rich when the British came to India. But it was not abjectly poor either. For the time the 17th century C.E. India was about average. Its per capita income was nothing to write home about but important bit coming up the aggregate was substantial since the population was large even then (compared to the population of Britain.) One can come up empty handed trying to rob a poor person but can make a fortune robbing millions of people, poor or rich. Anyhow, the British came, built the necessary institutions, and started extracting and exploiting Indians. Read More- deeshaa.org

Delhi Traffic Police to issue E-Challans

Tech savvy traffic cops in New Delhi are preparing to issue e-challans in a pilot project undertaken by the state transport department. Mobile teams will issue traffic tickets to vehicles violating traffic rules. Motorists who violate traffic laws will be issued these e-challans and the details of their vehicles will be updated on the transport departments central database. In many western countries, governments are known to follow a Demerit Points System wherein every traffic offence attracts a certain amount of fixed points. Whenever a driver is charged with a traffic offence, the points are automatically added to the traffic department and polices database. After a fixed threshold is reached, the driver gets a temporary ban on his/her license. This ban can range from months to up to an year depending on the type of offence and other related factors. There may also be a permanent ban imposed. If implemented in India, there are many possible advantages of this type of system. It can help nab repeat offenders and could very well be a significant addition to the government kitty via traffic fines. An immediate background check of the registration of a vehicle may help in keeping unlicensed vehicles off the roads. Read More- trak.in

Can U.S. and China Avert Accounting Armageddon?

Last year, the US-listed stocks of more than a few Chinese companies took a beating following accusations by short sellers and research shops like Muddy Waters that SinoForest and other companies many of which had avoided IPO scrutiny by arranging reverse mergers with already-listed entities were grossly exaggerating their real assets and business performance in their official financial statements. These accusations prompted the Securities and Exchange Commission (SEC) to launch several fraud investigations into the Chinese companies in question. If China wants Shanghai to become a global financial center, or the Renminbi to develop into an international currency, it has to do the same thing in securities regulation that did in airline safety regulation. It has to win the confidence of global investors just as it successfully won the confidence of global travellers. China closing the windows and battening the hatches to avoid embarrassment is not a solution; but neither is Americans telling the Chinese its our way or the highway. The U.S. has to make a forceful, compelling argument that adopting international norms of openness and cooperation on securities fraud investigations will help China achieve its ambitions but that until then, its no fly for unsafe stocks on U.S. markets. Read More- economonitor.com

Behind the Russian Protests: Rising Economic Expectations and a Business Leader Turned Activist
The state of the Russian economy puts Putin in a box. As long as it remains healthy, it only raises expectations, and makes people angrier than ever that the fruits of prosperity are not more widely shared. On the other hand, if the economy stagnates (and here are some reasons that it might), The Kremlin will find it harder than ever to deliver the blend of populist handouts for the masses and a generous flow of graft for insiders that keep the current regime in power. I spoke by Skype with Vladimir Ashurkov, a former top financial executive turned anti-corruption activist who represents this new element in the Russian opposition. Our approach is that if you have five minutes a week to help out, why dont you print out a leaflet and put it in your apartment elevator. If you have a few hours and some expertise, then maybe you can analyze a corruption case for us. If you have a few dollars, then you can make a contribution. If mass protests are your thing, then please, go out. If you are a leader in your local community, try to organize some activity like observing elections, repairing roads, or

 getting more transparency into your local electric utility. Our idea is that if people are engaged in these grassroots projects, then they will be more engaged in politics as well. The Russian economy is enjoying the greatest prosperity in its history. The standard of living is at an all-time high. But when people are doing better, they demand a higher level of political and civil freedoms. Read More- economonitor.com

Other Views:

This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does notwarrant its completeness or accuracy. Opinions and estimates constitute our judgment as of the date of the material and are subject tochange without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Therecipient of this report must make their own independent decision regarding any securities or financial instruments mentioned herein.Securities or financial instruments mentioned herein may not be suitable to all investors.