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Property Price Trends in Chennai

Last updated: November 19 2018
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  • Re : Property Price Trends in Chennai

    Originally posted by rsrin
    Minor point here is that FIIs when they investin equities or debt in any market will hedge the underlying Fx value to their base currency. So in India they will book forward hedge or INR/USD and hence there is no Fx depreciating risk to them - the only cost the forward premium.
    Hedges to protect the full Fx risk will reduce the yield substantially. If the USD is hovering around 48-50, they may hedge at 53-54 (unlikely number based on their projections or thesis and will lower the hedging cost as well ) and buying hedges at 48-50 will have steep protection cost and it undermines the very thesis of your investment.

    Mav

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    • Re : Property Price Trends in Chennai

      My point exactly if you need to cover full Forex risk and still yield a 4 to 5% yield i can gurantee most pension funds in US will move their money to india
      Credit worthiness is in question that i agree, may be they can invest in our gold loan companies or micro finance companies :-)

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      • Re : Property Price Trends in Chennai

        Originally posted by Economist View Post
        The fall of INR is more so due to the strength of USD against all majors.

        The past 10 year comparision period includes 7 years of GFC impact.

        we all know US was the prime victim of GFC and USD has devalued considerably from 2007 to 2013 (7 Years) due to QE messures of printing/flooding USD.

        In the past 7 years India was relatively unaffected by GFC.

        USD has just started its rally and it has a long way to go to make up for the losses in the past 7 years (provided US has turned the corner with GFC impact)

        I am bullish on USD, US Equities & US RE. There will be correction & False starts but it will eventuate.
        Eco , this is long over multiple beers philosophical debate, i agree the strength of USD exists due to theory of lesser evil and export economies continuing to devalue their currencies or pegging it to USD by letting USD be the reserve currency.
        INR will devalue due to inherent issues in India, welfare spending, CAD crisis, gold imports, diesel subsidies higher oil cost etc to name a few
        USD rally is happening not bcos of US economy strength , as much as the market is priced in on that, i just dont beleive it,
        I can categorically say the day when BEN comes out says QE is over, ALL HELL WILL BREAK Lose,
        The way QE is employed is a shame, giving money to big banks and not to credit unions while piling debt risk on american public is insane. Who is quantifiying the risk, ABS, MBS packages are being sold at 85B to FED every month by leading banks why so, why cant fed distribute the funds to smaller credit unions, branch bankings regional banks to foster small business they wont
        The act is no different than Dept of State using USPS to distribute Passport, what has POST office got to do with issuing passports to people, only reason they had the branch network, this is the lamest excuse from FED that they want to trickle it down through big banks as they have the infrastructure to spread it into the larger economy, its pathetic.
        Big banks make big deals with big corps who restructure debt, acquire other corps or invest overseas for cost reasons but dont promote local employment
        Education , higher ed/college/ technical training are totally undermined and no investments made there while college fees are at all time high
        Govt pulled the funding line from Sallie Mae why ? POLITICS >
        Sorry to go on this, the simple thought that Fed did this QE and economy magically works stinks, i benefit out of it , not by small, but by large large extent, all portfolios have ran up 30-40% in a very short term but racking 16T debt in 10+ years when Clinton left us in SURPLUS is a collosal shame.

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        • Re : Property Price Trends in Chennai

          Based on purchasing power and inflation, USD should be at 65+ for India. Full convertibility will see the true value emerge and it is unlikely and what you see is what GOI made you to see. Currency rates and inflation rates between the two countries makes it a zero sum game in theory - but it is our GOI artificial support which keeps the game alive.

          Sustainable way to make money on currency is to bet on a country on the throes of becoming stronger with lower inflation and you make a bundle on the differential as the market discovers and adjusts. Masses were fooled in 2007 by BRIC reports and GS prediction of INR 10 to a USD in 2050. Playing on INR strength sans the true economic growth/artificial prop ups is living on borrowed time and we should enjoy till it lasts.

          Mav

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          • Re : Property Price Trends in Chennai

            I agree with Rajagopal. INR fall against USD is not a surprise to me. India has had such a large and unsustainable CAD, that this is so obvious...

            Our Indian Media is never known to work anything more than propaganda arm, so they never saw this coming...

            I think we will have a rough time for next 6-12 months and we will surely cross Rs 60 per USD. But the results of this fall will do lot good for us in long run...

            As far as RE Investing, the cost of construction will continue to rise in next 12 months, courtesy diesel price rise (which will also hit rs 60 per liter) and this is election year, expect more profligate spending by UPA2 govt, all in all get ready for rolller coaster ride.

            Me think - all this will lead to slowdown in sales of built apartments by early 2014 (Esp in Chennai). Those who disagree , welcome to put your views , will be most happy to hear a bullish case...

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            • Re : Property Price Trends in Chennai

              Originally posted by maverick007 View Post
              Based on purchasing power and inflation, USD should be at 65+ for India. Full convertibility will see the true value emerge and it is unlikely and what you see is what GOI made you to see. Currency rates and inflation rates between the two countries makes it a zero sum game in theory - but it is our GOI artificial support which keeps the game alive.

              Sustainable way to make money on currency is to bet on a country on the throes of becoming stronger with lower inflation and you make a bundle on the differential as the market discovers and adjusts. Masses were fooled in 2007 by BRIC reports and GS prediction of INR 10 to a USD in 2050. Playing on INR strength sans the true economic growth/artificial prop ups is living on borrowed time and we should enjoy till it lasts.

              Mav

              At Rs 65 per USD, we will see quite some fall in domestic sales of all imported items - from Galaxy smart phones to Gold winner Oil...

              Diesel price also will shoot (along with LPG) and this means a nasty slowdown in Indian consumption story.. Surely all this together will impact RE (built RE/flat) sales and also rentals..

              OTOH, call centers from Manila should start relocating to here !!! (good for employment)

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              • Re : Property Price Trends in Chennai

                at 65 USDINR=X many of the chemical industries can pretty much stop manufacturing , if you are importing AlF3 or Bauxite or any other ores from china or brazil, your cost of raw material plus inflation plus labor cost will shut most businesses, thats precisely why GOI is shadow strong arming to keep it under control
                the news the RBI will intervene will let the forex traders on the short side to flee the trade which will make INR to stabilize expect that action this week
                Hindalco,Grasim,Nalco to name a few, include car manufacturers as well

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                • Re : Property Price Trends in Chennai

                  Originally posted by SRajagopalan View Post
                  at 65 USDINR=X many of the chemical industries can pretty much stop manufacturing , if you are importing AlF3 or Bauxite or any other ores from china or brazil, your cost of raw material plus inflation plus labor cost will shut most businesses, thats precisely why GOI is shadow strong arming to keep it under control
                  the news the RBI will intervene will let the forex traders on the short side to flee the trade which will make INR to stabilize expect that action this week
                  Hindalco,Grasim,Nalco to name a few, include car manufacturers as well
                  Nalco is a net exporter of Bauxite and should only benefit...Grasim is complex case, hindalco has large dollar revenues as well (Novelis)..

                  A number of blue chips, including likes of Reliance have lot of dollar denominated revenues and will only celebrate falling rupee...

                  Quite some SMEs which are facing brunt of dumping by ASEAN/China will celebrate, even as they keep quite in public , otherwise the labourers will start asking higher wages (our IT Companies are also like that, see the silence of NASSCOM when rupee devalues).

                  It is mainly consumers, consumer related businesses and those with large dollar borrowing which will get hit by falling rupee...

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                  • Re : Property Price Trends in Chennai

                    Originally posted by SRajagopalan View Post
                    I can categorically say the day when BEN comes out says QE is over, ALL HELL WILL BREAK Lose,
                    That sentance is the key.

                    That sentence "QE is over"

                    To me is a big positive sign for US & USD.

                    That sentence would confirm that the patient does not need medication he can get back to normal duties.

                    I think that day is not very far.

                    All the gains USD made in May (not June) is the strength of USD.

                    USD gained against most majors in MAY. It gave up some of MAY gains against a handfull of currencies in June.

                    INR 53.6 to INR 56.6 was USD strength.

                    INR 56.6 to INR 58 is Indian weakness in June.

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                    • Re : Property Price Trends in Chennai

                      Originally posted by Economist View Post
                      That sentance is the key.

                      That sentence "QE is over"

                      To me is a big positive sign for US & USD.

                      That sentence would confirm that the patient does not need medication he can get back to normal duties.

                      I think that day is not very far.

                      All the gains USD made in May (not June) is the strength of USD.

                      USD gained against most majors in MAY. It gave up some of MAY gains against a handfull of currencies in June.

                      INR 53.6 to INR 56.6 was USD strength.

                      INR 56.6 to INR 58 is Indian weakness in June.
                      Looking over a Longer term - if BEN stops his medication no doubt hell will break loose, but will not Crude Oil and Gold also significantly correct or drop?

                      India's biggest import items are Crude Oil and gold, and with falling rupee (due to Dr ben's possible announcement) we may very well set the foundation for a complete recovery say in an year or two after BEN does it...

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