BQuick On Feb. 3: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. India’s Manufacturing PMI Near Eight-Year High
The country's manufacturing sector activity climbed to a near eight-year high in January, driven by a sharp rise in new business orders amid a rebound in demand conditions.
- The IHS Markit India Manufacturing PMI rose to 55.3 in January from 52.7 in December.
- Companies noted the strongest upturn in new business intakes for over five years, which they attributed to better underlying demand and greater client requirements.
To complete the good news, there was also an uptick in business confidence as survey participants expect buoyant demand, new client wins, advertising and product diversification to boost output in the year ahead.Pollyanna de Lima, Principal Economist at IHS Markit.
Hiring activity, too, picked up in January.
2. China: Corona Virus Toll Climbs To 362; Faces Worst Stock Rout In Four Years
China’s death toll from the coronavirus reached 362, with confirmed infections in the country topping 17,000 as the epidemic continued to spread.
- Airlines in Asia, Europe and the Middle East stopped service to the mainland. The U.S. began limiting the entry of travellers from China, a process that could disrupt flight plans.
- China’s stock market opened to the most savage wave of selling in years, with around 3,257 shares falling by the daily limit after just minutes of trading.
- The CSI 300 Index sank as much as 9.1 percent -- a slump rarely seen in its almost 15-year history.
China also considers lowering 2020 growth expectations.
3. Sensex, Nifty End Higher As Investors Shake Off Budget Blues; U.S. Markets Advance
Indian equities recovered after posting their worst single-day decline of 2020 on Saturday after the government presented Union Budget for the year 2020-21.
- The S&P BSE Sensex rose 0.34 percent to close at 39,872.31 and the NSE Nifty 50 rose 0.53 percent to end at 11,724.05.
- The broader markets represented by the NSE Nifty 500 Index fell 0.46 percent on Monday.
- Eight out of 11 sectoral gauges compiled by the NSE ended higher, led by the NSE Nifty Media Index’s 1.7 percent gain.
Follow the day’s action here.
U.S. stocks advanced following steep losses Friday as investors monitored the international response to the coronavirus outbreak.
- The S&P 500 Index, up 0.6 percent as of 9:30 New York Time, bounced back from the worst week in six months.
- The Stoxx Europe 600 Index advanced 0.1 percent.
- West Texas Intermediate crude fell 1 percent to $51.07 a barrel.
Track global stock market action here.
4. Fall In Central Transfers To States A Risk To Growth, Say Economists
India’s Union Budget presentation on Saturday showed a significant decline in the fund transfers to states, which, according to economists, could pose an eventual risk to growth.
- The lower transfers were one of the three routes used by the government to keep its own fiscal deficit in check, said Prachi Mishra, chief India economist at Goldman Sachs. The other two ways include a higher dividend from the RBI and deferred transfer of food subsidies to the Food Corporation of India Ltd.
- A number of states have been complaining about reduced transfers from the central government, including delays in compensation cess that is to be provided when GST revenue growth falls below the guaranteed 14 percent.
- Revenue transfer to states dropped by nearly 50 percent of the cut in gross tax receipt assumptions, wrote Credit Suisse in a post-budget report.
‘However, a pick up of about 1 percentage point in GDP growth in FY21 is possible’
5. Ridham Desai Lauds Private Investment Thrust; Neelkanth Mishra Points To Growth Impulse
‘Push For Private Investments Commendable’
Finance Minister Sitharaman’s efforts to induce a long-term private investment cycle is commendable and will soon bear fruits, said Ridham Desai, head of India equity research and India equity strategist at Morgan Stanley.
- However, the decision to not remove long-term capital gains tax in the Union Budget 2020 is a missed opportunity to cement the progress after last year corporate tax cuts, he said.
I think we need to get the private investment cycle back. They [government] have made that choice, which is why, they are going to fire the bullets at the private investment cycle and consumption will take care of itself at some stage.Ridham Desai of Morgan Stanley
Here’s why Desai thinks buybacks will double in the next 12 months
‘Tax Goals Realistic’
The government’s budgeted tax goals are more realistic than what one has have seen in the past. That’s according to Neelkanth Mishra of Credit Suisse.
- The planned initial public offering of the Life Insurance Corporation of India shows that the government is serious about divestment, he said.
- The government expenditure-to-GDP ratio is expected to be higher in the next 15 months, Mishra said, adding that it due to the non-tax items like divestment receipts and telecom receipts and not due to tax collections going up.
The budget also moderates the headwinds for growth, says the member of PMEAC.
6. Nirma In Talks With Apollo, Bain For Emami Cement Bid
Nirma Ltd. is considering partnering with either Apollo Global Management Inc. or Bain Capital to bid for the cement unit of conglomerate Emami Group, Bloomberg reported citing people with knowledge of the matter.
- Nuvoco Vistas Corp., a cement unit of detergent maker of Nirma, has held separate discussions with the private equity firms for a potential offer for Emami Cement
- Nuvoco picked Arpwood Capital Ltd. and Credit Suisse Group AG to manage the sale of the unit, Bloomberg earlier reported.
Nirma is considering a valuation of about $1 billion for the unit.
7. Supreme Court Agrees To Hear Plea On IHH Open Offer For Fortis Healthcare
The top court agreed to hear a plea of a minority shareholder of Fortis Healthcare Ltd. seeking implementation of IHH’s open offer in its takeover deal for the Indian hospital chain.
- Market regulator SEBI, too, moved the top court supporting the implementation of IHH’s open offer.
- The Supreme Court also granted more time to Fortis Healthcare’s founders Malvinder and Shivinder Singh to pay up the amount due to Japanese drugmaker Daiichi Sankyo to purge themselves of contempt.
The court will hear the plea seeking implementation of the open offer next month.
8. Automakers That Defied The Slump In 2019
Most automakers sold fewer vehicles last year during the industry’s worst slump in decades as Indians cut back spending in a slowing economy. But there were a few outliers— a maker of scooters, a luxury car giant and even the seller of construction equipment.
- Suzuki Motorcycle India Pvt. Ltd. saw its two-wheeler registrations jump 14.9 percent to more than 5.8 lakh units. That was driven by the demand for its gearless scooter Access 125.
- Jaguar Land Rover India Ltd. sold 3,629 units through dealerships in 2019, an increase of 3 percent over the previous year. The Tata Group company outpaced German giants Audi and Mercedes Benz’s sales in India.
- This comes as average registrations of the auto industry declined 5.56 percent in 2019 to 2.14 crore units, according to data released on the website of the Ministry of Roads, Transport and Highways.
Also, companies making construction equipment saw an uptick in sales.
9. Race For Altico Capital Heats Up
Competition for ownership of Indian shadow bank Altico Capital India Ltd. has revived with the re-entry of Cerberus Capital Management LP into the race.
- New York-based hedge fund Cerberus submitted a bid for ailing Altico last week, after getting an extension from an initial deadline in the previous week, Bloomberg reported citing people with knowledge of the matter.
- Cerberus’ bid competes with a bid from SSG Capital Management, a shareholder-sponsored debt recast plan, and an asset swap bid mooted by some creditors.
The final field has narrowed since the restructuring process kicked off in September.
10. Amazon’s HQ2 Fiasco: Bezos Was Jealous Of Musk
Determined to meet Amazon’s founder’s demand for Tesla-size government handouts, the HQ2 team became victims of their own hubris.
- When Elon Musk secured $1.3 billion from Nevada in 2014 to open a gigantic battery plant, Jeff Bezos noticed. In meetings, the Amazon.com Inc. chief expressed envy for how Musk had pitted five Western states against one another in a bidding war for thousands of jobs.
- In 2017, Amazon won $40 million in government incentives to build a $1.5 billion air hub near Cincinnati. The paltry sum irked Bezos and made him even more determined to try something new. Thus, he kicked off the splashy reality-television-style contest for Amazon’s second headquarters.
Now, Amazon is just $100 million shy of the $2.4 billion Tesla has amassed in handouts.