Jun. 7 – India is likely to see flight of capital from its equity and debt markets in the next six months as global investors hesitate to pour money outside the United States due to the European debt crisis, a FICCI survey said.
The FICCI, a combined network of Indian chambers of commerce, said: “With de-leveraging (belt-tightening) expected to continue in the global markets, there is likely to be flight of capital from equity markets in emerging economies, including India.” The report also said that debt flows could be impacted.
The unfolding events on the global economic landscape, particularly in Europe, would also result in a tight liquidity position in the coming months, it said.
Finance minister Pranab Mukherjee, who is attending the G-20 ministerial meeting in South Korea, had said that if the recovery in Europe and the eurozone regresses, it may have an adverse impact on India.
“(There will be an impact) on our recovery because Europe still continues to be an important export destination of India,” he said.
Europe accounts for about 23 percent of India’s exports of around US$176 billion, while China’s exports to Europe amount to about 20 percent of its total and at a figure of US$236 billion.
And if that wasn’t bad enough for Europe, it may the case that the Euro might be survive:
http://www.telegraph.co.uk/finance/financetopics/budget/7806064/Euro-will-be-dead-in-five-years.html
Several weeks ago, China hinted at selling European Bonds and the stock markets crashed world-wide. China had to move quickly and “clarify” that she hadn’t intended to do so. Imagine what would happen if the Euro was dispensed with. It wold be ironic that those European countries in the EU that didn’t join the Euro might end benefiting from the Euro’s demise.
Ironic? Yeah, just what the British Government need to support the Pound. If the Euro goes that is a doomsday scenario, China especially holds billions of dollars in Euros. Media always loves speculating about currencies (as I know only too well) however don’t write off the Euro just yet. Wait and see, early next year it’ll be everyones darling. – Chris
There is not much hope of Euro survival. There is no way rescue package is going to work, here is why
1) Rescue package is $1 trillion but debt of PIGS is $2 trillion.
2) Rescue package is divided among all Euro countries, now if Spain and Greece has to pay for there own rescue, thats not rescue, or is it?
3) So basically Germany alone has to pay atleast $1 trillion and i doubt a) it will pay that much amount or b) it has that kind of money.
4) Even if by magic there debt is paid, then how long will it take PIGS to make a comeback? What about France’s debt which has $1.7 trillion debt, when is that due?
5) EU is not US and cannot print money like US.
Best for Germany is to cut losses and leave Euro, Eurozone, or European union now. An year from now would be too late. If that were to happen biggest causality will be France because French banks has biggest exposure to PIGS debt. That will bankrupt all major French bank and France will become third rate power overnight. This will surely make Germans enemy of French for atleast a generation. By the way i read somewhere that Germany has start printing Deutsche-Mark on a large scale.
China, India will be hit but i don’t expect major trouble for long term. Infact, India will have better claim to UNSC seat to be vacated by France.
China jus roars, but wont go for the kill and that too openly…if China wants to dispose its European bonds or Euros, it has to first find a buyer…without a buyer whom is it going to sell the stuff… also EU is an important market and if it goes PRC can feel the tsunami waves…
@Chris… am I right? if not, pls explain…
sincerely
Sai