Summary
With the lowering of Bank rates in U.K and so also all over the World, our analysis confirms that the AUTO/AUTO Anciliary Industry segment shall be in the forefront as the economy turns around. Bank of England and so also many other Central Banks through out the World have started buying back Goverment Securities to flush the market with cash that is more liquidity. This shall lower the lending rates for the Industry, infrastructure projects, new plants , and also generate demand .Many projects/products would become viable for manufacture within UK. Auto industry is the one in UK, now under acute stress, like in USA. With revival, more employment, more jobs, demand for cars/motorcycles would be the first, particularly small cars, as it is the essential commodity for all commuters. UK is the competitive hub for auto parts also. Consequently when demand revives in USA/INDIA, large quantity of parts would also get exported- particularly the high tech items for autos/railways/airways.
Analysis
Consequent to very pro-active actions taken by all G-20 nations and their Central Banks in first lowering the bank rates and now buy back of Govt. securities we have recast the revival schedule.
1.Auto Industry shall be the first to revive in INDIA/UK/CHINA.
2.House Building Industry shall also revive by Q1-2010
3.Many closed Infrastructure projects would be back on rails.
4.Retailers shall get space at lower cost rentals.
5.Some projects which were so far not worthy of financial closure on account of large funding and interest costs would become viable.
6. Employment opportunities shall expand
7. With more jobs/employment, demand for goods and services shall grow.
We expect higher growth rates in India/ China , say 6.5% and 7.5% respectively in the second half of 2009 and revival of economies of UK/USA by Q2-2010 - say growth rate of 1/2%. Japan/Taiwan/South Korea shall take a little longer on account of very high dependence on exports- and also because of backdoor protectionism to some extent by USA.
