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Quick Take
Will President Obama be able to bring confidence back into investment markets?
30 Jan 2009
We asked... Pratish Devadoss, MD, VGN Developers; Dipen Shah, vice-president, private client group research, Kotak Securities; Raja Gopalakrishnan, senior vice-president, global solutions, and MD, India Fidelity National Information Services; K. Ilango, president, Coimbatore District Small Industries Association (CODISSIA) ; Kunal Banerjee, president, ICWAI; Mukesh Dedhia, director in Ghalla Bhansali Stock Brokers; Waqar Naqvi, CEO, Taurus MF; Ajay Trehan, CEO, AuthBridge Research Services; Kapil Aggarwal, director, commercial lines, Optima Insurance Brokers; Rahul Aggarwal, CEO, www.Click2insure.in
"Maybe. President Obama has assured that his focus will be on investment and infrastructure."
Dipen Shah, VP, private client group research, Kotak Securities
"Enterprise governance drive by Obama will lift the investment climate globally."
Kunal Banerjee, president, ICWAI
"Obama will not be able to bring confidence immediately though he seems to have good ideas."
K. Ilango, president, CODISSIA
YES BECAUSE: President Obama has assured that his focus will be on investments, infrastructure and the jobs market. This is a positive as this addresses the core of the economy. However, the extent of effectiveness will depend largely on the finer details of the $850 billion stimulus plan and how efficiently and quickly it is implemented. There can be some initiatives which may be negative from the stock market perspective in the short term but effective in the longer term for the economy. He is expected to focus on accountability and transparency in capital markets. Expectations are high from Obama and there is no doubt that he will go all out to bring back confidence into the investment markets.
NO BECAUSE: The issues surrounding the economic slump are so deep that it will take a considerable amount of time to put things in order. Though his initial actions — economic stimulus package worth almost $850 billion — are headed in the right direction President Obama will not be able to bring confidence back in the markets anytime soon. Considering that the slowdown is spreading to all sectors, consumer spending is lowest in decades and banks are wary of lending, the US president alone cannot resolve the issues. The bailouts are happening from taxpayers’ money, which will lead fiscal deficit to swell. Obama has made some sensible comments during his first few days in office but it remains to be seen what real measures his administration will take to revive sentiments globally.
MAYBE BECAUSE: His enterprise governance drive will lift the investment climate globally. The manner in which Obama spoke about wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis, brings rays of hope for investors the world over. Although investment markets may see initial gains, sustaining this momentum will depend on many factors, the primary one being consumer confidence. The stimulus package offered by Obama is more about infrastructure spending and tax cuts, which might not have a big effect on the investment markets.
(Businessworld Issue 3-9 Feb 2009) |
Sensex rises 61 points in opening trade 
