Market roundup | House prices reach pre-crisis levels globally
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Global house prices back at pre-crisis levels
The International Monetary Fund’s (IMF’s) Global House Price Index—an average of house prices across countries—is now almost back to its level before the financial crisis. According to an IMF report, while the overall Global House Price Index is back to where it was before the crisis, the underlying picture is quite varied. For instance, house prices have remained on a downward path for 18 countries where these prices had fallen substantially post-crisis. These include Brazil, China and Russia. India stands among countries where the price correction was modest and witnessed a quick rebound later.
Companies’ interest cover improves in Q2
A CARE Ratings analysis of 2,425 firms outside the banking, finance, information technology and oil sectors, indicates that interest cover—calculated as a ratio of profit before depreciation, interest, and taxes/interest—has improved from 4.8 in the first quarter of fiscal year 2017 to 5.1 in the second quarter. Higher interest cover indicates that companies are better able to finance their interest costs with operating profits. Of course, it must be noted that these aggregate numbers mask the fact that for some firms, debt servicing remains a challenge.
Rubber price on a roll again?
Domestic rubber prices are on the rise again. At about Rs130 per kg, they are 10% higher from a fortnight back. They are also higher when compared to year-ago levels. One factor driving prices is higher demand from the domestic auto industry that has posted a 16% year-on-year growth. Note that the auto industry accounts for little over two-thirds of rubber consumption. According to analysts, rubber prices may not sustain at high levels. One, there is likelihood of surplus production this season. Two, international prices have not been rising at a similar pace. And third, the temporary backlash of demonetization on auto demand may also hurt tyre production, which could result in softer rubber prices.