Four Important Digital Marketing Trends for 2014

Four Important Digital Marketing Trends for 2014

eMarketer recently released its Key Digital Trends for 2014 research report with a strong focus on mobile, always-on consumers and what this means for marketers. The full report can be downloaded here (registration required), but here’s a quick summary.

Deloitte replaces PwC to become Biggest Intl Accounting Firm

Deloitte reported fee income of $32.4bn last year, just ahead of PwC with $32bn. EY came third with $25.9bn, followed by KPMG with $23.4bn, according to a survey from International Accounting Bulletin (IAB).  Deloitte’s lead is mainly

Financial wealth in Asia more than tripled since 2001: HSBC

Financial wealth in Asia has more than tripled since 2001 to over USD 80 trillion and if the current trend persists the growth will be even faster in India than in China.

Share market: which political party should win the election?

The immediate trigger for the stock market is the January 28 policy meet, but the big event that investors are waiting for is general elections. The elections this time assume more importance than ever for an investor as in the last two general elections, the stock market saw gap moves. In 2009 and 2004; the market was up 18% and down 19%, respectively.

Bharatiya Janata Party, BJP

"If somehow the markets start to believe that the BJP might not form the government, then you would see a decent amount of selloff on the markets," says Prashastha Seth, IIFL Private Wealth.

BNP Paribas says a Narendra Modi-led administration is seen as having the potential to deliver better, more decisive governance, kick-starting structural reforms, re-accelerating FDI inflows at a national level and ultimately reinvigorate India's macroperformance over the medium term.

Global rating agency Moody's in a report this week said BJP's victory can offer better economic management and investment-friendly policies to investors.

"If elected, a Modi-led BJP government should offer a more business-friendly policy that will further support confidence and investment," said the report.

BJP's share of the national vote has declined in the last three elections and, in 2009, it only managed 116 seats with 21.4% of the popular vote.

Aam Aadmi Party, AAP

The emergence of Aam Aadmi Party, or AAP, has changed the status, and the possibility of a hung Parliament is something which is now being seriously weighed by experts.

"It is essentially unlikely that AAP will win elections and be part of a rolling coalition. I'm truly disappointed at the spectacle of a chief minister being a protester. A chief minister is a CEO, his job is to pick stuff, not stand outside and protest," says Ajay Shah, Senior Fellow, NIPFP.

"As of today yes (AAP leader Arvind Kejriwal is a nut case), he says in front of the television cameras that he is an anarchist. That is no way for a chief minister to be," he says.

Jim O'Neill, ex-chairman, Goldman Sachs AMC, says AAP appears to have made the election situation quite tricky.

"I would imagine that when you get closer to the general elections, they might not seem so attractive, as they have done in the local elections recently, but it is really an important event for India," he says.

Congress

"Congress-led UPA has served us for 10 years. We are disappointed by the underperformance of the UPA in delivery," says Ajay Shah.

"So, for example, the goods and services tax was there even before UPA-I started; but over 10 years, the UPA has failed to deliver on that," he adds.

On the positive, he says, "The project shelf has improved in UPA's time. They have given us UID Authority of India, they have given Delhi-Mumbai Industrial Corridor, they have given us the Indian Financial Code, and so on. So, there is a strong shelf. Our bottleneck now is in execution," he says.
  BNP Paribas says in a report that "rightly or wrongly, the Congress-led UPA government, which has been in power since 2004, is seen as largely responsible for India's macro-travails of recent years."

Neutral stand

"Irrespective of which government comes to power, things are going to be improved hereon. We are at an inflecion point for the economy after seeing worst," Sanjay Dutt, Director, Quantum Securities, told ET Now last week.

Experts are in fact seeing a rally of about 15% on benchmark indices irrespective of what government comes to power.

"Some of the macro issues are behind us and despite the fact that there is very little to show on growth front, our view is that returns will be better in the range of about 15%," Prabhat Awasthi, Head-Equity Research & MD, Nomura, told ET Now.

"That is not assuming any political upside or downside risks," he clarifies.

"Whatever the new government might do given the state of the economy, some of the healing that the economy has seen will probably stay in place," he adds.

How Costly will the rupee going to cost you in 2014????...............

It is that time of the year when stock market analysts churn out predictions for 2014. Goldman Sachs, a US-based global investment bank, predicts a faster economic growth for India this year but expects challenges in terms of inflation and high interest rates. 
 
Here are five expectations of the bank on India in 2014:
 
1. Better Growth:  Goldman Sachs predicts India’s economy to grow at 5.5% in 2014-15 due to high exports and increase in investment demand. India’s economy represented by the GDP is expected to grow at 4.3% in 2013-14. GDP is calculated by tallying all the expenses and investments in the country, be it at the individual, organizational or government levels. It represents the total value of all the goods and services produced in the quarter. It is reported in two ways – at current and constant prices.

2. Lower inflation: The consumer inflation represented by CPI index is forecast at 8.3% (9.7% forecast for 2013-14) and wholesale prices are expected to rise at 6.3% in 2014-15 (6.5% in the year ago period) due to rising administered prices and an elevated inflation expectation. WPI is measured by calculating the increase in wholesale prices of goods. This is generally lower than retail or market prices. CPI is also called retail inflation as it measures any rise in the prices at which goods are bought by the end consumer. 

3. High interest rates:  Goldman Sachs expects the Reserve Bank of India to continue to hike rates due to persistent inflation. “We see the repo rate moving up to 8.5% by mid-2014, as the central bank moves to targeting the CPI,” the investment bank predicts. For the year 2013-14, the repo rate is lower at 7.75%. RBI decides the lending rates as part of its ‘monetary policy review’. It does so by setting the repo rate – the rate at which RBI lends to commercial banks. No loan rate can fall below the benchmark repo rate.

4. Lower current account deficit: Goldman Sachs predicts the current account deficit to remain under 3% of GDP in FY14-FY16, close to sustainable levels, driven by better exports alongside weaker oil and gold imports. India is battled a wide current account deficit (CAD) – the amount it owes to the world. Trade deficit is a major part of the current account deficit. A wide CAD puts pressure on the rupee and fuels inflation. 

5. Rupee to fall: Goldman Sachs predicts the rupee to continue to depreciate gradually due to higher inflation than trade partners, the improvement in the current account and balance of payments may limit the magnitude of depreciation. The bank predicts the rupee to hover around Rs 65 to US dollar in 2014-15. The rupee has been making headlines the past few months after it dropped to its lifetime-low of 68-to-a-dollar levels.

Thomas Cook, Sterling Holiday ink Rs. 870 crore merger deal

Thomas Cook, Sterling Holiday ink Rs. 870 crore merger deal

Prem Watsa-controlled Thomas Cook (India) Ltd. (TCIL) and Chennai-headquartered vacation ownership company Sterling Holiday Resorts (India) Ltd. have announced a Rs 870-crore merger deal.

Post-merger, Sterling will be a 100 per cent subsidiary of TCIL. It will continue, however, to retain its name, and be run independently by its Managing Director, Ramesh Ramanathan, and his team.

The deal has been structured in a manner that Sterling will get Rs. 187 crore by way of preferential allotment of 23 per cent stake to TCIL. Since this will trigger an open offer, Rs. 230 crore has been earmarked by TCIL for this purpose.

TCIL will also buy out most of the existing shareholders of Sterling collectively holding 23 per cent stake for Rs. 176 crore. Then, there will be a merger between the two companies at a defined swap ratio of 120 shares of TCIL for every 100 shares of Sterling.

The transaction is expected to close by the fourth quarter of 2014, and the open offer price will be announced later. Post-merger, Sterling will be de-listed from the stock exchanges but Mr. Ramanathan will continue to hold his stake in the merged entity.

“We are extremely happy to partner with Sterling, which has tremendous opportunity given the current environment. Ramesh Ramanathan and his team will continue to run this business. The synergistic opportunities that this new partnership offers are enormous,” Madhavan Menon, Managing Director, Thomas Cook (India) Ltd., said.

“We have no intention of integrating Sterling into TCIL. This is the Fairfax method of working. We will operate at arms length and we will share opportunities,” Mr. Menon said.

“The merger with Thomas Cook will strengthen our market position as there are multiple natural synergies which both companies will mutually benefit from. This deal will put Sterling back where it belonged. Thomas Cook customers will have access to our pan-India network of well located, full-service, quality resorts which offer great holiday experiences,” Mr. Ramanathan said.

“Sterling stands to benefit from TCIL’s iconic brand reputation and its large base of domestic and inbound travellers,” he added.

INDIAN GOLD MARKET!!

Indian gold demand has grown 25 per cent despite 400 per cent price rise of the rupee in the last decade. Research reaffirms India as a key driver of global gold demand, expects increase by over 30 per cent in real terms.

The World Gold Council research shows that by 2020 cumulative annual demand for gold in India will increase to excess of 1200 tonnes or approximately Rs. 2.5 trillion, at current price levels.

India’s continued rapid growth which will have significant impact on income and savings, will increase gold purchasing by almost 3% per annum over the next decade. In gold terms, India is a market with significant scale. In 2010, total annual consumer demand reached 963.1 tonnes. As seen in the last decade, Indian demand for gold will be driven by savings and real income levels, not by price.

India’s role as a key driver of global gold demand is reaffirmed by the research:

·         At more than 18,000 tonnes, Indian households hold the largest stock of gold in the world.

·         Gold purchases in India accounted for 32% of the global total in 2010

• The CMIE forecasts that India’s annual real GDP will grow at over 10% from 2010-15, before slowing to an average rate of around 8.4% until 2020
• The vast majority of the Indian population (70%) live in villages, which have traditionally formed the source of more than two thirds of Indian gold demand
• This sector has been growing at less than 1% per annum but is projected by CMIE to grow in future at over 5% per annum, further fuelling gold demand.

·         India will remain pivotal to the global gold market. In the Indian culture, gold is an integral part of daily life where purchase of gold jewellery is considered as a form of a liquid and tradable investment for the accumulation of wealth. It is important to highlight that in analyzing the gold market in India, traditional perception of the division between jewellery and investment demand and demand drivers do not apply.

As consumers have just adjusted their price expectations upward, a further rise in gold jewellery and investment demand could be anticipated and this trend is projected to continue over the long-run as local investors are buying gold driven by wealth accumulation motive.

The fact that Indian gold jewelley and investment demand remains robust, despite the rising price emphasizes the enduring demand among local consumers to purchase gold driven mainly by its allure as a jewellery and its properties as a hedges to offset the effects of depreciation and erosion of both saving and income. The country currently has one of the largest saving rates in the world; estimated at around 30% of total income, of which 10% is invested in gold. Continued rapid economic growth and urbanization will create greater wealth but also inflationary pressures stimulating gold demand.

Table 1: India gold market as a % of global gold market, tonnage terms (2012)

PARTICULARS	% GOLD MARKET OVER GLOBAL        MARKET
ANNUAL DEMAND	14.75
ABOVE GROUND STOCK	11
RECYCLED GOLD	07
CENTRAL BANK HOLDING	1.9
ANNUAL MINE SUPPLY	0.2

Analysis:

The above table shows the percentage of India’s gold market as a percentage of global market. It shows the annual demand, above ground stock, recycle gold, central bank holding and annual mine supply which India accounts globally.

Seasonality

Aggregate Indian gold demand has an underlying seasonality. However, demand in each state seems to be dedicated by its own marriage, monsoon and harvest season. The Hindu calendar is marked by a series of religious festivals and auspicious occasions by buying gold which are unique to each individual state. Similarly there are a number specific days that are considered inauspicious for gold purchases. Based on historic trends, the most active gold buying period is during the winter wedding season, from beginning of September to March.

Although there is no perfect rule of thumb to seasonality but based on observations it is known that January, February, September and November have been the strongest months for the rupee gold price.

 Monsoon rains

Historically, Indian gold demand has also been impacted by the monsoon rains. This is because they provide the main source of water for more than half of Indian farms and the return of rains boosts rural incomes. During the first half of 2010, news of good monsoon season and weak stock performance partly set the scene for the recent improvement in gold demand.

It is assumed that local consumers and fabricators will increasingly be purchasing or restocking on dips in the gold price rather than during the traditional auspicious period, weakening the influence of seasonal factors. In the past, local consumers have typically been reluctant to purchase gold during periods of high volatility for fear that they buy and then find that the price falls. However, the ongoing strengthening in the local gold price seems to have increased price expectations among domestic consumers and may have encouraged buyers to accelerate their purchases in anticipation of a further price acceleration. For example, local consumers have recently been buying gold even in inauspicious times such as Hindu’s Pitrapaksha period in order to avoid the rush and potential rising price during the Navratri, Dhanteras, Diwali festivals and the Non-Resident Indian wedding season later in the year.

RECYCLED GOLD SUPPLY

Since 1992, Indians have recycled an average of 92 tonnes of gold per annum. In 2009, the supply of domestic recycled gold rose 29% to 116 tonnes while domestic gold demand fell by 19%. Historically, recycling activity has been sensitive to general economic conditions, the price of gold and price expectations. This is attributable to the fact that gold functions both as savings and as a form of money in India – i.e. gold is a tradable, liquid asset. However, amidst the recovery in domestic gold market, a considerably higher price will be required to stimulate another wave of recycling activity to flush out additional supplies of old gold.

In the long-term, we believe that recycling activity will continue to play an important role in the domestic gold market especially given the substantial estimated stock of over 18,000 tonnes owned in India. Sales of existing gold assets given consumers the benefit of liquidity and recycled gold is also expected to continue to provide flows of gold supply to meet demand.

The following are the key empirical conclusions of the impact of key variables on Indian gold demand:

·         Price has a statistically significant impact on India’s gold demand, in the short-run as well as in the long-run. In particular, the price of gold shows an inverse elastic relationship to gold demand. At the same time, gold demand is significantly and positively responsive to income, wealth, the “risk-free” real interest rate, global supply conditions, personal income taxes and government capital expenditure.

·         A key feature of long-run gold demand is that in terms of coefficient size, price elasticity is substantially higher than the income elasticity and wealth effect individually. However, both wealth and income have a positive effect on gold demand, this implies that in the long-run growth of gold demand, income and wealth can counteract some of the negative effects of rising gold prices.

·         Real income has a positive effect on gold demand with different short-run and long-run effects. However, income appears to have a slightly higher impact on short-term changes in demand than it does in the overall long-term level of demand. Also, there is evidence that gold jewelry demand is more elastic than fabrication with respect to price, income and wealth effect.

·         Financial wealth, as given by real equity prices, has a higher positive impact on gold demand in long-run than the short-run. While equity price elasticity of gold demand is lower than price and income elasticity, because of its frequency and fluctuations, it can also have an important impact on gold demand.

·         Real yields on government bonds show an inverse relationship to gold demand. Thus, gold serves as an alternative instrument for savings. When analyzing gold jewelry demand and using agricultural income, impact of interest rates turns lower, implying that gold jewelry demand in rural areas may not be as sensitive to interest rates in urban areas.