BQuick On Jan. 3: Top 10 Stories In Under 10 Minutes
This is a roundup of a day’s stories in brief.
1. U.S.-Iran Conflict Opens Yet Another Grimy Episode For Middle East
A U.S. airstrike in Iraq ordered by President Donald Trump killed one of Iran’s most powerful generals, sending global markets tumbling as Iran’s Supreme Leader threatened “severe retaliation.”
- Qassem Soleimani, who led proxy militias that extended Iran’s power across the Middle East, was killed in a drone attack in Baghdad authorized by Trump, the Defense Department said in a statement late Thursday.
- The death of Soleimani, who led the Revolutionary Guards’ Quds force, fueled concerns that the U.S. and Iran could be drawn into an armed confrontation that could easily pull in other countries.
- The pressures, which have been building for months, have been complicated by widespread protests in Iraq and Iran.
Iran’s top leaders all condemned the attack and vowed to hit back in a “severe retaliation”.
Soleimani was no ordinary military commander. He wielded influence at home through his close ties to the country’s Supreme Leader, forged during a military career that spanned the bloody eight-year war with Iraq to paramilitary operations in countries including Iraq, Syria and Lebanon.
- For all practical purposes, Soleimani ran Iran’s foreign policy in the Middle East.
- Soleimani’s popularity surged as his military exploits made him the face of Iran’s fight against the Sunni jihadists of Islamic State. He regularly visited front lines in Iraq and Syria.
Read about how Soleimani helped shape the modern Middle East.
Escalating tensions between the U.S. and Iran sent stocks tumbling and spurred demand for haven assets including gold, the yen and Treasuries. Oil surged.
- All three of the main U.S. gauges slumped. The S&P 500 Index sank 1 percent as of 9:31 a.m. New York time.
- The developments derailed a bullish mood that pushed the S&P 500 Index to a record high.
- The yen strengthened, gold hit the highest in four months and the yield on 10-year Treasuries looked poised for the biggest drop in three weeks as government bonds rallied.
Get your fix of global markets update here.
2. Adani To Buy Majority Stake In Krishnapatnam Port
India’s largest multi-port operator is set to acquire majority stake in Krishnapatnam Port Co. Ltd. from Hyderabad-based CVR Group.
- Adani Ports And Special Economic Zone Ltd. informed the exchanges today that it will acquire 75 percent in the all-weather deep-water port in Andhra Pradesh for Rs 13,572 crore.
- The enterprise value of Krishnapatnam Port works out to 10.2 times its operating profit for FY19.
- Adani Ports, in comparison, trades at nearly 13.5 times its FY19 EBITDA.
- The acquisition fits well with the Adani Ports’ plan to enter Andhra Pradesh and achieve 400 million metric tonnes of cargo throughput by FY25 through organic and inorganic growth opportunities.
Here’s what Adani Ports stands to gain from the acquisition.
3. IndiGo Promoter Feud: Gangwal Sets Up Another Clash With Bhatia
Rakesh Gangwal, IndiGo co-founder who publicly bickered with his partner Rahul Bhatia last year, wants to scrap provisions that require the airline’s controlling shareholders to seek permission from each other for buying or selling shares.
- The board of InterGlobe Aviation Ltd., the operator of IndiGo, has called an extraordinary general meeting on Jan. 29 to amend the Articles of Association, according to an exchange filing.
- The request came from Gangwal, his wife Shobha Gangwal and the their Chinkerpoo Family Trust—36.64 percent owners of the airline—on Dec. 24.
- Gangwal wants changes in the articles to remove the provisions of the shareholder agreement that lapsed in November.
- But the company, in the statement, said it has legal opinion that the agreement and the articles do not impose an obligation on the board and the management to approve the proposed amendments.
That can potentially trigger another round of bickering between the two promoters.
4. Will Suzlon’s Lenders Take The New Debt Recast Deal?
Suzlon Energy Ltd. will offer to restructure debt at a steeper discount than Indian banks have been willing to consider so far, said people familiar with the matter, pushing the wind turbine maker closer toward bankruptcy.
- The Pune-based company proposes to swap its Rs 11,300 crore ($1.6 billion) of outstanding debt into Rs 3,600 crore of new debt, translating to a 68 percent discount, the people said, asking not to be identified as the terms are private.
- Lenders had earlier indicated a willingness to take a 50 percent haircut, the people said.
- The fresh proposal follows an assessment by Suzlon’s rating company, on how much debt can be sustainably recast. A meeting with creditors is planned for next week, one person said.
Lenders would now have to decide if this offer is better than what they could get if they tip Suzlon into bankruptcy court.
5. Indian Stocks, Rupee Mirror Global Peers
Indian equity benchmarks ended lower, mirroring global peers as tensions between U.S. and Iran escalate.
- The S&P BSE Sensex fell 0.39 percent to end at 41,464.61.
- The NSE Nifty 50 fell 0.45 percent to close at 12,226.65.
- The broader markets represented by the NSE Nifty 500 Index fell 0.38 percent.
- “The flare-up in the Middle East is the key reason for the fall in the market today. There could be some profit booking after the rally we have seen so far,” G Chokkalingam, founder of Equinomics Research & Advisory told Bloomberg.
- Nine out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
The Association of Mutual Funds in India has reclassified stocks based on market capitalisation which now mutual funds have to realign schemes within a month.
Find out other changes here.
The Indian rupee plunged to its lowest level since Nov. 20 due to a spike in crude oil prices after the U.S. killed top Iranian commander Qassem Soleimani in an airstrike.
- Rupee fell by 42 paise to settle at 71.80 against the U.S. dollar.
- At the interbank foreign exchange market, the rupee opened at 71.56, then lost further ground to touch a low of 71.81 against the American currency.
- The rupee had previously closed near this level on Nov. 20.
See how the domestic currency performed in trade today.
Also read: What’s Aiding The Rally In Shrimp Stocks
6. After Tata Sons, Ratan Tata Too Moves Supreme Court
Ratan Tata on Friday filed a petition in the Supreme Court seeking to quash a company law appellate court order directing Tata Sons to rehire the chairman it had fired in 2016, saying the judgment was "wrong, erroneous and contrary to the record of the case".
- His petition is separate from the one filed by Tata Sons Ltd., the holding company of the $110 billion salt-to-software conglomerate, in the Supreme Court on Thursday that sought a stay on the National Company Law Appellate Tribunal's Dec. 18 order to reinstate Cyrus Mistry as the chairman.
- Ratan Tata, who is chairman emeritus and a shareholder of Tata Sons, in the petition, said the NCLAT judgment was wrong as it treats Tata Sons as a two-group company.
- Mistry, he contended, was made the Executive Chairman of Tata Sons in a purely professional capacity and not as a representative of the Shapoorji Pallonji Group, which holds 18.4 percent in Tata Sons.
Tata alleged that Mistry’s leadership brought “ill-repute and reputational losses” to the group.
7. Managing State Finances: Maharashtra FM Worried About Deficit
The western Indian state of Maharashtra—India’s largest in terms of gross state domestic product—is expecting its fiscal deficit to hit the threshold of 3 percent in the ongoing financial year amid a slowdown in tax revenue.
- “Our fiscal deficit is almost touching 3 percent,” Jayant Patil, who holds charge of the finance ministry in the newly appointed government in Maharashtra, told BloombergQuint in an interview on Dec. 23.
- The state’s revenue deficit is sizeable too, Patil said.
- Wider deficit is a consequence of lower revenue amid growth in gross state domestic product.
- According to Patil, the state will not meet its growth estimates.
- Like the central government, states, too, had budgeted for nominal growth of 11 percent.
- Actual nominal growth in the first half of the year has been just 7 percent, with states seeing far weaker economic expansion compared to what was anticipated.
If Maharashtra is not growing at the expected rate, it will impact the whole country, Patil claimed.
8. Property Portals Are Aiding Recoveries For Banks
Banks are increasingly tying up with real estate listing portals to sell properties repossessed from defaulting borrowers to increase chances of recoveries.
- A number of lenders and non-bank financial companies have partnered with portals such as MagicBricks and Quikr Realty in the last few years to list and auction repossessed properties.
- That’s in addition to earlier efforts to sell such assets through third-party websites, including Auction Tiger, TenderWizard and Bank E-auctions.
- According to the Reserve Bank of India’s rules, a loan turns bad when a borrower has not repaid obligations due for 90 days.
- In case of defaults on mortgage or business loans, lenders have the right to repossess and sell assets provided as collateral after moving the Debt Recovery Tribunal, National Company Law Tribunal and other judicial authorities.
Property portals enhance transparency for potential buyers and lenders in such sales and improve chances of recovery, one expert says.
9. Saying No To 1,100-Sq-Ft Homes
Mumbai plans to redevelop an area equivalent of 40 cricket fields with 2,800 houses in the city’s suburbs. Residents would get apartments measuring around 1,100 square feet. Yet, a section of Motilal Nagar’s residents are unsure.
- A section of people in the six-decade-old locality in Goregaon, spread over 149 acres, wants even bigger homes from the Maharashtra Housing and Area Development Authority.
- Gaurav Rane, joint secretary of Jan Kalyankari Samiti, a residents’ welfare association, is among them. “We’re not against redevelopment but MHADA seems to be imposing its idea of redevelopment.”
- The resident's demands include houses of 1,600-sq-ft carpet area, two parking lots, modern amenities like clubhouse, biogas and solar power and a corpus of Rs 20 lakh for each flat.
But no rehabilitation scheme has so far offered such large apartments in India’s costliest real estate market.
10. Do The New Labour Reforms Help Women?
There aren’t enough provisions in the labour reforms that address wage disparity by gender and female workforce upskilling, writes Lavanya Shanbhogue Arvind.
- The concentration of the female workforce in informal sectors continues to remain a cause of concern
- The labour reforms do not specifically address what corrective measures will be taken to equalise pay structures between the gender.
- Currently, women comprise only 3 percent of the top management of influential and important corporations.
An overhaul of labour laws cannot be possible without involving women in key decision-making processes.