The Globalization of “Locusts”

By Kavaljit Singh | Commentary | May 30, 2005

In April 2005, Mr. Franz Müntefering, Chairman of the Social Democratic Party (SPD), the dominant party in Germany’s ruling coalition, described private equity funds and hedge funds as “swarms of locusts that fall on companies, stripping them bare before moving on.” He told a German newspaper that “some financial investors don’t waste any thoughts on the people whose jobs they destroy.” Later on, the German press published an internal SPD memo listing a dozen “locusts” (including Goldman Sachs and Kohlberg Kravis Roberts & Co.) whose short-term profit-maximizing strategies have received considerable public criticism. Several commentators discounted the remarks of Mr. Müntefering as part of rabble-rousing campaign…

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Citi Never Sleeps

By Kavaljit Singh | Commentary | February 8, 2005

From a market capitalization perspective, Citigroup ($243 billion in mid-June 2004) is the biggest financial services group in the world. With $1264 billion in assets, the US-based bank is not just a big bank but provides well-diversified financial services ranging from investment banking to insurance in more than 100 countries. According to The Banker, Citigroup earned pre-tax profits of $26.3 billion in 2003, up 15 per cent from previous year.

Despite its spectacular growth and performance, Citigroup has been in the news for its wrongdoings. Given the scale of financial scandals and market manipulations Citigroup have been recently involved, nothing appears more appropriate than its popular…

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Speculating on Black Gold

By Kavaljit Singh | Commentary | December 7, 2004

Since early 2004, international crude oil prices have witnessed a massive upsurge. For several days in the second half of 2004, oil prices remained at US$50 a barrel. Although oil prices have declined in the past few weeks, yet they still remain on a higher side. Almost 70 percent rise in oil prices in the past one year has caused widespread panic across the world. The price hike shocked the OPEC (Organization of Petroleum Exporting Countries) which expressed its inability to calm down the markets by increasing oil supply. Such an unpredictable rise in oil prices could have devastating consequences for the world economy which cannot cope…

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Securities Transaction Tax Disproves All Fears

By Kavaljit Singh | Commentary | November 3, 2004

On October 1, 2004, the Securities Transaction Tax (STT) came into implementation in the Indian financial markets. The market players and analysts who had predicted that the introduction of STT would bring Indian financial markets to a standstill have been proved completely wrong. On the first day of the implementation of the STT, not only the Sensex (India’s most popular stock index) witnessed an increase of 91.93 points (highest since the introduction of STT was announced by Finance Minister in July 2004) but the Indian authorities also collected over Rs. 50 million in tax revenue. It has been estimated that based on existing trading volumes…

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Equitable Equity: India Introduces Securities Transaction Tax

By Kavaljit Singh | Commentary | July 16, 2004

On July 8, 2004, India’s Finance Minister, P. Chidambaram, presented Finance Bill (Bill No. 22, 2004) in Parliament in which he proposed the introduction of Securities Transaction Tax (STT) in the Indian financial markets. Under the proposal, every transaction in securities in a recognized stock exchange in India would attract a turnover tax of 0.15 per cent. Transactions in stock and index options and futures would also be subject to transaction tax. Whereas transactions carried out on the Negotiated Dealing System (a screen-based system for trading in government securities and bonds) operated by the central bank, Reserve Bank of India, have been…

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