Blue-chip stocks, economic metrics headed for Ground Zero

NEW DELHI: It's a free-fall for many towards 'ground zero' in the world of economy -- be it shares of iconic names like Citi, AIG, GM and Ford, or macroeconomic metrics like interest rates, inflation and GDP growth. Having an ownership pie in AIG, once the world's biggest insurer, does not cost even half a dollar now, while Citigroup, again once the world's biggest bank, is hanging just over one-buck mark. Not far away are General Motors and Ford, the world's two largest carmakers, with share prices of just over one-dollar level. A year or so ago, these names were among the prized brands of the stock market also, besides the areas of their businesses, with share prices in multiples of current levels. Giving company to these and many other once blue-chip stocks in their free-fall towards near-zero levels are macroeconomic indicators like interest rate, inflation and GDP growth rates, not only in the world's biggest economy, the USA, but also at many other places. People have started talking of a deflation scenario -- where inflation slips into negative territory -- even in India, while many developed economies have already seen their GDP growth rates dipping into the red. Besides, the world seems to be fast moving towards zero interest regime, as benchmark rates in many nations are being cut to stimulate the economy. The US central bank Federal Reserve has cut down its key rates to 0-0.25 per cent, while Bank of Japan has slashed its rate to 0.1 per cent. Besides, the rates in the UK, Canada, Switzerland and Hong Kong have come down to 0.5 per cent.
Except for some Middle-East, African and South American economies, interest rates in India and China are among the highest at 3.5 per cent and 5.31 per cent respectively. Rates in Egypt, South Africa, Turkey and Brazil are above 10 per cent. In terms of Gross Domestic Product (GDP) growth rates, a downturn is being witnessed across the world, although some like India and China are still maintaining some commendable rate of over five per cent and eight per cent respectively.
Source: ET