BQuick On June 18: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Air Passenger Growth Rebounds
Airline passenger traffic in India picked up in the usually strong holiday month of May, even as Jet Airways (India) Ltd. halted operations.
- Air traffic grew 3 percent over last year as operators added capacity.
- Nearly 1.2 crore passengers flew in the month.
- Passenger growth was led by GoAir, InterGlobe Aviation Ltd. and SpiceJet Ltd.
- The Ajay Singh-led SpiceJet’s passenger growth rose to a 20-month high.
- Its market share was also the highest in over four years.
Passenger load factor, a measure of capacity utilisation, declined for all major airlines.
2. RBI Fines HDFC Bank
The Reserve Bank of India imposed a penalty of Rs 1 crore on HDFC Bank Ltd. for not complying with its know-your-customer and anti-money laundering norms.
- The central bank, in a statement today, said customs authorities had alerted them about certain importers submitting “forged bills of entry” to the bank instead of remitting foreign currency.
- HDFC Bank also failed to follow the RBI’s regulations with regard to reporting of frauds, according to the statement.
The penalty was imposed after considering HDFC Bank's reply, oral and additional submissions.
3. How Blockchain Can Help Digital Lenders
India’s digital lenders are looking for a new solution to the age-old problem of ‘loan stacking’, where a borrower avails loans from various lenders within a short span of time.
- Banks, microfinance firms and now digital lenders targeting small businesses have often found themselves blindsided as borrowers take on multiple loans from different lenders.
- This eventually leads to an increased risk of defaults.
To deal with this problem, digital lenders are working on a blockchain-based ledger.
4. Indian Truckers Have A Lot To Worry
As India’s economy slows, makers of trucks have more to worry than falling consumption.
- Commercial vehicle sales have been erratic in the last year.
- But transporters are also battling overcapacity after rules changed last year allowed trucks to ferry more weight.
- Freight prices haven’t recovered and smaller players that dominate the industry face financing problems, making things worse.
Financing too has been a problem, especially for small transporters.
5. Sensex Snaps Losing Streak, U.S. Stocks Rally
Indian equity benchmarks snapped their four-day fall and ended higher, paced by gains in metal stocks.
- The S&P BSE Sensex closed 0.22 percent or 85 points higher at 39,046.
- The NSE Nifty 50 ended at 11,691, up 0.17 percent or 19 points higher.
- The broader market index represented by the NSE Nifty 500 Index closed marginally higher at 0.1 percent.
- Seven out of 11 sectoral gauges compiled by NSE advanced.
- Cash strapped airline Jet Airways slumped 40.8 percent— its worst intraday fall after lenders took the company to National Company Law Tribunal to cover their dues.
Follow the day’s trading action here.
U.S. stocks surged on hopes that President Donald Trump will de-escalate his trade war with China, adding to gains sparked by the ECB’s signal it is ready to cut interest rates if warranted.
- The S&P 500 jumped within 1 percent of its all-time high after Trump tweeted that he will meet with Chinese President Xi Jinping at the Group of 20 summit next week in Japan.
- Trade tensions have weighed on stocks since Trump escalated his trade war in early May.
- Stocks and bonds rallied around the world earlier after Mario Draghi said the European Central Bank is ready with stimulus if needed, adding to expectations for easier monetary policies.
- The Federal Reserve is widely expected to strike a more dovish tone with its decision at the end of it’s two-day meeting Wednesday.
- The yield on the benchmark 10-year Treasury approached 2 percent before the notes pared gains on the Trump tweet. German 10-year yields tumbled further below zero.
- West Texas Intermediate gained 2.4 percent to $53.17 a barrel.
Get your daily fix of global markets here.
6. Dr. Reddy’s Selling Spree Continues
Dr. Reddy’s Laboratories Ltd. has agreed to sell its neurology branded products to Upsher-Smith Laboratories as part of its plan to exit specialty business to focus on profitability.
- India’s second-largest drugmaker by revenue will sell its U.S. and select territory rights for Zembrace and Tosymra (used for treating migraine), which were commercialised through its wholly owned subsidiary, Promius Pharma.
- With the latest sale, Dr. Reddy’s has almost exited the proprietary portfolio of products already commercialised, according to Morgan Stanley.
- The sale of proprietary products would help to mitigate operating losses in this business.
So far, the company has sold five specialty products over the last three months.
7. Blackstone-Backed REIT Is A Winner
India’s first ever real estate investment trust has outperformed peers since its debut in late March, helped by a low interest rate environment that’s forcing investors to look elsewhere for yield.
- Blackstone Group LP-backed Embassy Office Parks REIT has risen 21 percent since its listing, beating indexes that track REITs in Singapore and Japan.
- “This kind of return isn’t usual from a REIT,” said KVS Manian, an executive director at Kotak Mahindra Bank Ltd.
- “A large part has to do with the benign interest rate environment in India now,” he added.
Embassy operates around 33 million square feet of office space.
8. Another Headache For Power Producers
Indian power producers, reeling under debt, are up in arms against a circular that proposes a threefold hike in their reinsurance premiums.
- The Association of Power Producers of India wrote to the Ministry of Power saying implementation of the circular by General Insurance Corporation, issued in February, would adversely affect performance of power plants.
- The body in its May 22 letter—a copy was reviewed by BloombergQuint—also urged GIC Re, banking secretary and the insurance regulator to ease the norms.
- GVK Power & Infrastructure Ltd. told BloombergQuint that insurance premium has nearly doubled and that will hit profits.
Still, it isn’t the sole point of contention in the circular by India’s largest reinsurer.
9. Facebook’s Own Cryptocurrency
Facebook Inc. unveiled plans for a new cryptocurrency that the social-media giant hopes will one day trade on a global scale much like the U.S. dollar.
- Called Libra, the new currency will launch as soon as next year and be what's known as a stablecoin -- a digital currency that's supported by established government-backed currencies and securities.
- The goal is to avoid massive fluctuations in value so Libra can be used for everyday transactions in a way that more volatile crypotcurrencies, like Bitcoin, haven’t been.
- Libra is the culmination of a year-long effort to devise an easy way for Facebook users to send and receive money through its messaging services.
To come anywhere close to matching the U.S. dollar for utility and acceptance, Libra will need to be widely trusted.
10. Om Birla Likely To Be Lok Sabha Speaker
Bharatiya Janata Party leader and two-time Member of Parliament, Om Birla, has been named the Narendra Modi-led National Democratic Alliance government’s nominee for the Lok Sabha speaker's post, sources told PTI.
- Once nominated, Birla—who won from the Kota-Bundi Lok Sabha seat in Rajasthan, will easily become the speaker as the NDA has a clear majority in the Lower House of the Parliament.
- He will succeed eight-term MP Sumitra Mahajan as Lok Sabha speaker.
The election for the Lok Sabha speaker’s post is scheduled for Wednesday.
Meanwhile, five-time Congress MP from West Bengal, Adhir Ranjan Chowdhury, will be the party leader in the Lok Sabha, PTI reported citing top party sources.
- Chowdhury’s name was cleared by the top party leadership after which a letter of his appointment was handed over to the Lok Sabha secretariat, they said.
- Chowdhury was part of the top Congress leaders' meeting at Gandhi's residence.
This is for the second time in a row that Congress has failed to get the post of Leader of Opposition.