Hedge funds do well in EMs, no thanks to Asia

Latin America and Russia/Eastern Europe are the markets that did all the heavy lifting during the year, with gains in the range of 25-26%


Graphic by Naveen Kumar Saini/Mint
Graphic by Naveen Kumar Saini/Mint

Hedge funds did well in emerging markets (EMs) in 2016 compared to 2015, shows data from Hedge Fund Research (HFR) with the HFRI Emerging Markets Global Index returning a gain of 7.6% in 2016, compared to negative returns in the previous two years.

Asia ex-Japan had little to contribute to this turnaround with the two leading markets—India and China—giving negative returns. Latin America and Russia/Eastern Europe are the markets that did all the heavy lifting during the year, with gains in the range of 25-26%.

Renewables to power ahead

The outlook for renewable power generation over the next five years appears promising. The government’s focus on renewables should take this segment’s contribution from 14% in FY16 to 19% in FY20.

Under the renewable purchase obligation, state electricity boards must buy a certain portion of renewable energy every year, ensuring robust growth.

For FY17 itself, the target of 12-14 gigawatts is nearly twice that of a year ago. Within renewables, solar capacity addition is far higher than wind capacity.

There is hope that even conventional energy producers will be required to produce at least some power in renewable form.

Higher focus on renewable energy could certainly threaten thermal power plants in the coming years, which are already suffering low utilization levels of 55-60%. It’s also a challenge for thermal power equipment suppliers such as Bharat Heavy Electricals Ltd.

Rail passenger bookings drop after Nov spurt

Demonetization gains did not last long for Indian Railways. The national carrier, whose revenues rose 6% in November on a sharp rise in passenger bookings, reported a 1.9% drop in revenues last month.

The total number of passenger bookings on originating basis fell 1.5%. In November they were up 7%, the sharpest rise in 2016. November saw a disproportionate rise in passenger bookings as travellers rushed to book tickets with discontinued currency.

The passenger reservation revenues during the month jumped 20.6%. This slowed to 4.9% in December. Similarly revenues from goods and services fell 2.4% in December compared to a 1.1% growth in the earlier month.

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