Announcement

Collapse
No announcement yet.

Great Time To Buy - Get Ready For The Gentle Bullish Market

Collapse
X
Collapse

Great Time To Buy - Get Ready For The Gentle Bullish Market

Last updated: August 15 2009
31 | Posts
3417 | Views
  • Time
  • Show
Clear All
new posts

  • Great Time To Buy - Get Ready For The Gentle Bullish Market

    The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.

    This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.

    The interesting out come I have seen is:
    • Emerging economies like China,India & Brazil has come out fine in the GFC.
    • China (with resilient growth and commodities purchase)was the trigger that had ended the GFC.
    • The wester countries are surprised (by the resilience of China & India) and now reaffirmed that future growth is in China & India.
    • I am seeing renewed optimism and bullish behavior on investor sentiment towards China and India.
    • In Nov 2008 no western investor wold have dreamed of investing in Indian money market or short term debt market ( The wheel that moves property market in India)
    • Now there is renewed interest in the west to invest in Indian credit market due to stable INR and Interest rate arbitrage (ROI 2% US and 3.5% Australia against 7% India)
    The Indian credit wheel that runs runs the growth of India is now moving again,The wheel is slowly being oiled by foreign investments again and the the wheel will picking up speed.

    Equity market is seeing foreign investor returning to ride the upside.

    M&A acitivities are picking up,IPO's are on the cards again.

    NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.

    The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.
  • #2

    #2

    Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

    Originally posted by Economist View Post
    The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.

    This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.

    The interesting out come I have seen is:
    • Emerging economies like China,India & Brazil has come out fine in the GFC.
    • China (with resilient growth and commodities purchase)was the trigger that had ended the GFC.
    • The wester countries are surprised (by the resilience of China & India) and now reaffirmed that future growth is in China & India.
    • I am seeing renewed optimism and bullish behavior on investor sentiment towards China and India.
    • In Nov 2008 no western investor wold have dreamed of investing in Indian money market or short term debt market ( The wheel that moves property market in India)
    • Now there is renewed interest in the west to invest in Indian credit market due to stable INR and Interest rate arbitrage (ROI 2% US and 3.5% Australia against 7% India)
    The Indian credit wheel that runs runs the growth of India is now moving again,The wheel is slowly being oiled by foreign investments again and the the wheel will picking up speed.

    Equity market is seeing foreign investor returning to ride the upside.

    M&A acitivities are picking up,IPO's are on the cards again.

    NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.

    The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.
    Nice writeup Economist, hoping to hear more from you.

    The RE boom was scripted by excessive credit and increasing salaries.

    In my opinion the renewed interest in markets like India, China, Brazil etc is only because we provide cost effective outsourcing solutions to their problems in sectors like IT,Banking,Telecom,Healthcare, auto etc.

    With the spending power of the developed countries reduced, the pressure on the developing countries to keep the wages low will also increase.

    unless we start catering to the domestic demand and markets of developing countries, this wont change.

    This is the time when entrepreneurs India should get more dynamic and focus on creating international brands and provide homegrown solutions and penetrate emerging markets to make India a global leader.I Really hope we do it.

    As you said,foreign investors are only looking for short term arbitrage opportunities, they are not investing believing the growth story of India and they may abandon anytime.The government was planning a 3 years lock in period for FDI only to address this.

    with the Indian companies focussing now on productivity and effeciency.It is no more whether the company is number 1 or number 10.Its whether the business is running profitable or not.Its only the yield (i.e. income/expense) that decides whether an employee should be retained or not, Not the skill or experience.The competitiveness to be attractive among other equal contenders will ensure salary remains low.

    When salary is not increasing like before, the loan eligibility of people will also reduce.Though credit is now easily available, no bank is ready to loan 4-6 times the gross salary of a person like in 2005-2008.Its atmost 2-3 times the gross salary even when at low interest rates.

    I wouldnt agree that increasing credit should mean increasing growth and necessarily increasing salary.

    In my opinion, This liquidity can help only in keeping the RE price stagnant in the areas where property is available for the amount for which the loans are being sanctioned.with the ticket size of loans being very low, it would only expedite correction in all other areas towards the new price centre and not fuel another RE boom.

    Another RE boom is surely possible, but only when salary/per-capita income also starts increasing again.It doesnt seem to be now.

    Comment

    • #3

      #3

      Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

      Well Said Nabishek.

      Comment

      • #4

        #4

        Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

        #1 & #2 are good posts and make sense in their own respects.

        #1 is correct in the sense that FII s have duly noted the resilinece of indian economy and INR as well. The recent FII investments are a proof. some of the quantitative easing money is finding its way into India and as #2 pointed out the arbitrage opportunities are attarctive.
        Though, there may not be a boom in the immediate term, there is probably going to be no doom as well as far as Indian RE ic concerned. its probably going to be sideways with occasional sngle digit corrections/appreciations for the next 2-3 years i.e +/-10% movement from now to next 2-3 years.. So, if you postpone it for a couple of years, you are not necessarily going to priced out unlike 2005-08 scenario, OTOH, you are not going to gain also much.

        Comment

        • #5

          #5

          Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

          This Economist member somehow seems familiar, . I somehow feel something familiar, the same talk, the same urgency to tell others to buy now or never.

          Comment

          • #6

            #6

            Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

            Originally posted by contra View Post
            This Economist member somehow seems familiar, . I somehow feel something familiar, the same talk, the same urgency to tell others to buy now or never.

            Dear friend

            This guy has not yet used the familiar word "pichakkaran" and "kilpaukan".

            Thanks

            chataara

            Comment

            • #7

              #7

              Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

              Tax Code

              The new Tax code has many RE investors thinking.

              The Govt seems is hell bent to stamp out undue speculation and thus Bubbles.

              Guys there r no tax benefit for house.

              So now investors have to shift to greener pastures : commodities

              Comment

              • #8

                #8

                Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

                Originally posted by Economist View Post
                The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.

                This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.

                The interesting out come I have seen is:
                • Emerging economies like China,India & Brazil has come out fine in the GFC.
                • China (with resilient growth and commodities purchase)was the trigger that had ended the GFC.
                • The wester countries are surprised (by the resilience of China & India) and now reaffirmed that future growth is in China & India.
                • I am seeing renewed optimism and bullish behavior on investor sentiment towards China and India.
                • In Nov 2008 no western investor wold have dreamed of investing in Indian money market or short term debt market ( The wheel that moves property market in India)
                • Now there is renewed interest in the west to invest in Indian credit market due to stable INR and Interest rate arbitrage (ROI 2% US and 3.5% Australia against 7% India)
                The Indian credit wheel that runs runs the growth of India is now moving again,The wheel is slowly being oiled by foreign investments again and the the wheel will picking up speed.

                Equity market is seeing foreign investor returning to ride the upside.

                M&A acitivities are picking up,IPO's are on the cards again.

                NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.

                The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.
                • Emerging economies like China,India & Brazil has come out fine in the GFC.
                >Have you seen latest Russian GDP growth.It shrank 10.9% last quarter
                • China (with resilient growth and commodities purchase)was the trigger that had ended the GFC.
                >China's purchase of commodities is slowing down.Proof is baltic index has moved in negative for the last 9 weeks.China is growing because of huge stimulus from government.Once the stimulus fades lets see how much it grows.Anyway stock market is falling in China anticipating this.Finance offical from China himself had agreed that GDP numbers may not be entirely correct and China does lot of data massaging.
                • In Nov 2008 no western investor wold have dreamed of investing in Indian money market or short term debt market ( The wheel that moves property market in India)
                >Can you elaborate how short term debt market moves property market.Are you talking about real estate companies?





                I was thinking that short term debt is never invested in property.Can you give some proof for this.
                • Now there is renewed interest in the west to invest in Indian credit market due to stable INR and Interest rate arbitrage (ROI 2% US and 3.5% Australia against 7% India)
                >Interest arbitage is there for long and not now only western world has found it out.Remember INR fell from 35 to 50 and now moved around 47.Is this stability.

                The Indian credit wheel that runs runs the growth of India is now moving again.
                >Have you seen the latest credit figures from RBI.It is saying the opposite.

                NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE
                >Is the price low now?
                Last edited by BigBear; August 13 2009, 12:45 PM.

                Comment

                • #9

                  #9

                  Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

                  Originally posted by Economist View Post
                  The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.

                  This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.

                  The interesting out come I have seen is:
                  • Emerging economies like China,India & Brazil has come out fine in the GFC.
                  • China (with resilient growth and commodities purchase)was the trigger that had ended the GFC.
                  • The wester countries are surprised (by the resilience of China & India) and now reaffirmed that future growth is in China & India.
                  • I am seeing renewed optimism and bullish behavior on investor sentiment towards China and India.
                  • In Nov 2008 no western investor wold have dreamed of investing in Indian money market or short term debt market ( The wheel that moves property market in India)
                  • Now there is renewed interest in the west to invest in Indian credit market due to stable INR and Interest rate arbitrage (ROI 2% US and 3.5% Australia against 7% India)
                  The Indian credit wheel that runs runs the growth of India is now moving again,The wheel is slowly being oiled by foreign investments again and the the wheel will picking up speed.

                  Equity market is seeing foreign investor returning to ride the upside.

                  M&A acitivities are picking up,IPO's are on the cards again.

                  NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.

                  The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.
                  Hi Economist,

                  First of all kudos for a well written article. However I must warn you that any bullish writing on this forum is the easiest way to pick up mortal enemies.

                  While Nabhishek is a bear, he is also a gentleman. So he will digress with you. The pity is Nabhishek is intelligent but is simultaneously bridled like a horse. He is talking about salary increase. What he fails to understand unfortunately is reserve power. When you study engines a more powerful engine is one having more reserve power. So a bullet is better than a yamaha for its reserve power. In other words, while a yamaha might speed off in a flat road the bullet will overtake the yamaha on a slope. {Well one bear on this forum does love bikes but since he will not understand engineering it is futile to explain to him thus.}
                  Now the govt is proposing to reduce tax to abyssmal levels. 10% tax upto 10L annual income releases so much of this reserve power or reserve income that just this will fuel a hyper growth. In India much against our silly bear friends' views, people continue to have long term views, even the youngsters. Today long term is characterised by possession of RE. So this reserve moneypower in the hands of our folks will chalk out a plan of inflation with price of RE shooting up. Infact even if interest rate moves up this reserve power will act against it and let RE shoot up.
                  So Economist, my view is that you are too soft a bull. Ofcourse as you said even if the two digit number is 15% it will mean that after your mandatory 5 years RE price will be 2.01 times or doubled. However RE curves are non linear (again I cant explain such terms to our undereducated bear friends!) and so will shoot up in the latter portion. Based on Japan's growth in 80s, my strong view is that RE bought today will cost almost at the same ratio 5 years from now as it rose in the past 5 years. In other words if a land shot up 5 times between 2004 and 2009, my view is it will be 5 times of today in 2014 or 25 times of 2004 prices. This might sound unreasonable to the conservative purists. However many things are poorly understood by the linearly operating purist.
                  Incidentally the salary of College professors which was around 25K in 2004-5 is now hovering at 1 to 1.25L. These are safe jobs and unlike SW guys these folks can plan and execute their purchases sensibly. Similar is the salary hike and also the huge arrears collected by govt servants. Infact the retirement salary of quite a few folks today is around 3 to 5L p.a. That is nothing measley for owning a flat at 50L. I know of a railway guard who earns 35K p.m. including overtime.
                  Now RE to me is investment in land. With land prices having shot about 7-10 times another multiple like that will look like I am insane. (The bears think so about me anyways!} However when that (7x7=49 times from 2004 levels) happens they will not be insane, they will be in coma! I personally knew this super duper rise and anticipated it in 2004. I prevented sane folks from selling, some did not listen, then I got others to buy. Today they have independant houses, not a silly flat in some outskirt.
                  I must remind you that no piece of tangible information in 2004 told one to buy then. I want to know how many of these sick bears bought in 2004. If they couldnt predict the upmove what chance is their in their silly predictions today.
                  As for the future, reserve power(aka lower taxes), safe buyers (aka govt employees) will spiral the price of realestate. I will tell folks to go and buy even now, though they might think it is costly. The fact of reality is that markets don’t move looking at fundamentals. They move based on mass view. Given this reality it will be unwise to sell any piece of usable land. That by itself will increase demand as is seen today. There are limited buyers and limited sellers. Another post in this forum where someone whose land was quoted at 20L an year ago, got to know that 10L price was the asking rate today and went out to buy. Sadly though 10L was the price suggested there were no sellers.
                  Also note an interesting post from Kkumar. He challenged one of the famous bears here stating that the bear should sell out every piece of RE he holds (or claims to hold) today and should not buy stocks either as everything according to this bear was moving downwards. That funny bear refused to answer Kumar!
                  In summary, your post Economist is not only interesting and meaningful but is also triggering the bears to respond to you vehemently. Remember though my warning. You need to be as strong as me to take on these bears. There are three types of them.
                  Sophisticated/educated bear is Nabhishek who is a gentleman and though I don’t agree with his conclusions, he talks logically.
                  Semi educated bear names are Wiseman and BigBear. They will talk like gentlemen to begin with, but if you note their innuendos you will see the scum they generate.
                  The third kind is the run of the mill Cheri bears. They are most unsophisticated, will talk anything and some of them will abuse not only you Economist but also your mother, your wife and anybody they think they can abuse. One of these bears created a pseudonym of my id. So I wont be surprised to see a Ecoonomist id very soon just to piss you off. Fortunately I was able to make this id into a caged lovebird but you will certainly be irritated by these bears. Also Wiseman might talk about stalking you and your id. He is capable of trying to terrorise you in all possible ways. So if you (Economist) want to continue writing here your bullish views, you will either have to take on all this, or retreat and disappear. Ofcourse one silly guy who was writing as a bull suddenly had to write bearish as he got a better offer from the bear BPO. The bears are writing their stories here (save Nabhishek) for pecuniary reasons to please vested interests. So they might forment all sorts of trouble to you.

                  With this, I must admit that your analysis stands as one of the sanest testament on this board. All the best.

                  Comment

                  • #10

                    #10

                    Re : Great Time To Buy - Get Ready For The Gentle Bullish Market

                    I've never heard of a "gentle" bull market!

                    Originally posted by Economist View Post
                    The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.

                    This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.

                    Equity market is seeing foreign investor returning to ride the upside.

                    M&A acitivities are picking up,IPO's are on the cards again.

                    NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.

                    The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.

                    Economist,

                    I will not pick an argument about the many "feel-good" statements made by you to arrive at your bullish outlook. But there are a few problems I see ...

                    Can you tell me anytime in the past when we had a "gentle" bull market?

                    We did have a flat period of consolidation between 1992 (post Harshad) and 2000 (post-Ketan :p and more popularly post-***-com). But mildly bullish? Please let me know. Since markets are moved by human sentiment, which tend to the extreme 30% of the time and remain in equilibrium the rest of the time.

                    There is just one more point. On balance there are as many selling days for FIIs as there are buying days. So, where did you get this data about FIIs returning to the market in any significant way!

                    Like Abishek says, bullishness in RE will come when people "feel" richer on a sustained basis. During the last few years, banks helped them feel richer. Now, this tap is firmly shut. In general salaries are at best flat and in many cases down and this situation is likely to remain so for some time to come. This is because the world is experiencing probably the sharpest contraction in "credit" in modern history and, coupled with serious over-capacity in almost every imaginable manmade thing, we will see a considerable period of deflation (as contra says). The Western world is likely to see a decade-long deflationary depression and we should probably see a severe deflationary recession for quite a long period of time.

                    So, exactly where do you see this buying coming in which will not only eliminate the HUGE backlog of inventory (Delhi is reported to have 15 Crore SFt and Bombay, 10 Cr SFt besides all the other cities), but will take up all the new building required to get back prices up even in a "gentle" way.

                    Any guesses where all this money is going to come from?! And how it is going to reach our pockets so we can go out and spend again without concern about the future and get ourselves back into this same mess again?

                    MY POINT OF VIEW
                    ------------------
                    I believe that we are again on the verge of another massive decline (you might even call it crash). This time, it will be harder on general sentiment because people have come in at the top of this rally to put in their last reserves into the market, believing the spin-doctors in the Govt and hoping to recover their losses.

                    When they see even this money go down the drain there will be a much more serious crisis of confidence and a more telling impact on sentiment. This time around, many more fence-sitters (especially builders out on the edge of a limb) will come in with distress prices as well as banks trying to get whaever they can out of REOs - bank owned foreclosed properties.

                    You are right. Prices are lower. But they need to go much lower to make it meaningful again for people to buy and hope for a gain due to genuine buying. Right now, prices are at a level where th growth will only come from the "greater fool".

                    Let us see what happens. And we won't have to wait long since this decline should come in in the second half of this year itself, maybe even within the next 3 months. Patience!

                    cheers
                    Last edited by wiseman; August 14 2009, 12:17 AM.

                    Comment

                    Have any questions or thoughts about this?
                    Working...
                    X