BQuick On May 14: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Jet Airways: Top Management Exodus
Jet Airways (India) Ltd. Chief Executive Officer Vinay Dube resigned today, hours after his deputy and Chief Financial Officer Amit Agarwal quit. Dube’s exit caps a spate of resignations at the debt-ridden airline ever since it was grounded in April.
But top management exits are not the only thing the airline has to deal with.
Nearly six months after State Bank of India began scrambling to stitch together a resolution plan for Jet Airways, the country’s largest lender finds itself back at square one.
- In bids closed last week, Etihad Airways PJSC offered to retain its 24 percent equity stake in Jet Airways but stopped short of offering any comprehensive resolution plan.
- With no other serious bidders emerging, lenders led by SBI are now preparing to begin a fresh search for a majority investor in Jet Airways.
- According to two people in the know, lenders took the call to initiate another search process at a meeting on Monday.
The lenders do not have any preferred pool of investors.
2. A Two-Horse Payments Race
India’s payments banks, intended to take small deposits and reduce financial exclusion in the country, saw a pick-up in business in 2018, shows Reserve Bank of India data.
- However, more than 90 percent of the deposits were held by just two of the seven payments banks currently operational.
- Payments banks had mobilised around Rs 780 crore in deposits, spread across savings and current accounts, as of December 2018, shows RBI data accessed by BloombergQuint via a Right To Information request.
- This is an increase of 77.5 percent over the Rs 440 crore in deposits held by these banks in March 2018, the data showed.
Here’s what a break-up of the deposits held by individual payments banks shows.
3. Tata Group To Fold Food Businesses Into One Unit
Tata Sons Ltd. is set to transfer all its branded food businesses to Tata Global Beverages Ltd. from Tata Chemicals Ltd., people with knowledge of the matter told Bloomberg News.
- Tata Global Beverages will buy all food brands and give shares in return to Tata Chemicals, the people said asking not to be identified as the discussions are private.
- Tata Global Beverages will also rename itself after the deal, with a formal announcement on the transaction expected as early as this week, they said.
- This is part of India’s biggest conglomerate attempts to streamline its corporate structure.
4. Wanted: A New European Partner For Tata Steel
Tata Steel Ltd. is looking for a new partner for its joint venture in Europe after its deal with Thyssenkrupp AG collapsed.
- “We will look at all options to understand whether strategically there could be another player with whom we could do this and with whom we will not face a similar outcome,” Executive Director and Chief Financial Officer Koushik Chatterjee told BloombergQuint in an interview.
- The future of Tata Steel’s units in Europe has been thrown into doubt after its planned joint venture with the German steelmaker collapsed over the European Commission’s concerns.
- “There could be some other option which we could work around in terms of portfolio and we will have to evaluate each of them, weigh the pros and cons,” Chatterjee said.
Chatterjee says if there are no black swans, steel spreads would be range-bound.
5. Sensex Halts Losing Streak; U.S. Stocks Rebound
Indian equity benchmarks halted their nine-day losing streak, led by the gains in Reliance Industries Ltd. and ITC Ltd.
- The S&P BSE Sensex closed 227 points or 0.6 percent higher at 37,318.
- The NSE Nifty 50 ended at 11,222, up 0.66 percent.
- The 50-share index halted its longest losing streak in over eight years.
- The broader market index represented by the NSE Nifty 500 Index closed 0.57 percent higher.
- Ten out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. stocks rebounded on Tuesday as investors combed the remnants of the second worst rout of the year for bargains after both Chinese and American officials appeared committed to continuing trade talks.
- The S&P 500 rose from its worst loss in four months after President Donald Trump said negotiations will be “very successful” even as his administration prepped fresh tariffs on the remaining $300 billion of imports from China.
- Battered tech shares led gains as Apple Inc. and Nvidia Corp. bounced back from their biggest one-day declines since January.
- The dollar advanced for a second day against major peers, including havens such as the Japanese yen and the Swiss franc.
- The offshore yuan -- a key risk indicator due to concern China will use it to retaliate against U.S. tariffs -- stabilized after a six-day decline.
- Commodities targeted by Chinese tariffs -- soybean and cotton futures -- also reversed losses. West Texas crude rose above $61 a barrel.
Get your daily fix of global markets here.
6. Below Normal, ‘Sluggish’ Monsoon
Monsoon in India is likely to make a timely onset this year, private weather forecaster Skymet said today, even as it stuck to its earlier prediction of a below normal rainfall season.
- “The initial advancement of monsoon over peninsular India is going to be slow,” it said.
- All four regions—east, west, north and south—are likely to witness lesser than normal rainfall, it said, with precipitation over east, northeast and central parts poorer than northwest India and the southern peninsula.
Here are the other highlights from Skymet's region-wise monsoon forecast.
7. Automakers' GST Plea
Battling a slowdown, the automotive industry has urged the government to reduce the goods and services tax to offset higher costs of rolling out stricter safety features and cleaner Bharat Stage VI emissions standards.
- “Various regulatory changes, including mandatory safety features like ABS (anti-lock braking system), CBS (combined braking system) and airbags have led to an increase in the cost of vehicles,” Rajan Wadhera, president of the Society of Indian Automobile Manufacturers, told BloombergQuint.
- 28 percent GST is levied on vehicles, while auto companies are hardly making 7-8 percent, he said. “The reduction in tax will help the auto industry offset some impact of the safety and regulatory changes.”
- Automobiles sales have slowed since the festive season last year as increased upfront insurance costs and higher fuel prices kept buyers away. That caused the inventory to pile up at dealerships.
The plea comes as a last resort as even discounts have failed to lift demand.
8. Dear Reliance Industries...
The Rs 78,100-crore gap is puzzling. How did the valuation of Reliance Jio Infocomm Ltd.’s fibre and tower assets increase by that much even though some of that infrastructure is yet under development?
- The numbers cropped up in a Reliance Industries Ltd. investor presentation.
- The country’s second largest company by market capitalisation has decided to demerge the tower and fibre infrastructure of its telecom arm — Reliance Jio.
- The assets will be transferred to two special purpose vehicles — Jio Digital Fibre Pvt. Ltd. and Reliance Jio Infratel Pvt. Ltd., which will be controlled by an Investment Infrastructure Trust or InvIT.
The valuation jump throws up three questions.
9. Why Amazon Is A Threat For Its Sellers
Solimo, Symbol, Myx, Vedaka and Presto.
You may have bought products from these brands on Amazon India. But what you may have missed is that these, and many other labels, are owned by Amazon Inc. itself.
- After bringing AmazonBasics label to India in 2015, the online giant has now at least 16 private labels on its e-commerce website.
- That’s likely to make sellers dependent on the platform sweat.
- Amazon now accounts for nearly 40 percent of online sales in India, according to Arvind Singhal, managing director at retail consultant Technopak Advisors.
- By launching its own products at lower prices, it threatens to crowd out the merchants.
This is a quintessential Amazon move.
10. Update Your WhatsApp, Now!
WhatsApp pressed users to update its messaging service, following a report that a vulnerability in the software allowed attackers to hack into people’s phones using commercial Israeli spyware.
- The chat app had discovered a vulnerability in early May that could enable attackers to insert and execute code on mobile devices.
- WhatsApp said it made changes to its infrastructure late last week to block the attacks from taking place, adding that only a select number of users appeared to have been targeted through the vulnerability by an advanced cyber actor.
- The statement follows a report by the Financial Times that attackers were able to install surveillance software, developed by Israeli company NSO Group, on iPhones and Android devices by calling targets using the app’s phone call function.
WhatsApp said it has notified data privacy regulators of the breach.