Pakistan opposition leader Maryam Nawaz arrested: spokeswoman

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Pakistan opposition leader Maryam Nawaz was arrested on Thursday by the country’s National Accountability Bureau (NAB), a spokeswoman for her party said.

“Maryam Nawaz has been arrested,” Marriyum Aurangzeb, a spokeswoman for Nawaz’s Pakistan Muslim League (N) party told Reuters. “NAB arrested her from Lahore and we haven’t been given any reason or grounds for her arrest”.

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Government may not hike vehicle registration fees immediately due to auto sector slowdown

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Taking into account the current state of the automobile sector, the government may postpone the roll-out of hike in registration fees by a few months and may implement it from next year, people aware of the development told CNBC-TV18.

While the move to raise the registration fees for vehicles is seen as a step which was pending for a long time, the government may provide a gap of some months before its roll-out, the people said.

“While nothing has been decided but there is some preliminary thinking that we may look at bringing this into action from January,” a person aware of the development said.

The automobile industry has recently said that the proposed hike in registration fees may further aggravate the slowdown, which the sector has been witnessing for a year now.

Also read: These five factors have created painful downturn for India’s automobile industry

However, the government is believed to have countered this argument of the industry. The ministry of road transport and highways has told the industry categorically that the hike in registration fees is anything but a sales dampener, the people said.

“Automobile sales have been in the slow lane for some months and the larger reasons behind it concern liquidity tightening after the NBFC [non-banking finance company] crisis. The hike in registration fees is something which has been in the pipeline for a long time now and if anything, it should boost sales now. It cannot be seen as the reason behind the slowdown that the industry has been facing for some time now,” another person aware of the matter said.

The draft notification, released on July 24, has proposed an increase in registration charges of new vehicles by 10 to 20 times, depending upon the vehicle category, from the current level.

Also read: How a shadow banking crisis sent India’s autos sector into a tailspin

In new vehicle sales, the government has proposed hike in registration fees for two-wheelers from Rs 50 to Rs 1,000, for three-wheelers from Rs 300 to Rs 5,000, for light motor vehicle from Rs 1,000 to Rs 10,000 and for heavy goods vehicle from Rs 1,500 to Rs 20,000.

Following the draft notification, the Society of Indian Automobile Manufacturers (SIAM) had expressed serious concerns on the matter, stressing on the fact that the automobile industry is already going through an unprecedented downturn as sales of new vehicles have plummeted significantly over the last several months.

Also read: Suzuki posts 46% drop in Q1 profit on slowing India demand

“Such increase in the registration charges of new vehicles would further aggravate the market condition negatively,” Rajan Wadhera, president, SIAM had said.

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Nifty Midcap index check: Only these 9 stocks are up by over 20%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The turmoil in global equity markets has resulted in a massive selloff in domestic stocks, as concerns over the economic growth, the ongoing liquidity crisis and the US-China trade war tensions hampered investors’ risk appetite.

The Nifty Midcap index has fallen over 18 percent in the last one year with 70 stocks in the red while only 30 stocks have given positive returns. Among those 30 stocks, nine stocks are up by over 20 percent.

Adani Power was the best-performing midcap stock in the last 1 year, up 98 percent followed by SRF, up 57 percent; Muthoot Finance, up 50 percent. Meanwhile, Bata India and Info Edge advanced 46 percent, PI Industries rose 40 percent, Apollo Hospitals gained 36 percent, Torrent Power added 27 percent, and Power Finance Corp increased 24 percent.

Other gainers included Oberoi Realty, REC, Tata Global Beverages, GSK Consumer, Aditya Birla Fashion, Ramco Cements, Prestige Estate, and Berger Paints, up between 10-16.5 percent.

Going ahead, analysts say that the valuations look attractive but the risks remain.

“We continue to back growth at a reasonable price. We believe the way to construct portfolios is to buy stocks of companies with the highest delta in return on capital. We expect market performance to broaden; hence, we also like mid-caps where the forward growth is not reflecting share price performance,” Morgan Stanley said in a report.

Among the losers Dewan Housing, Reliance Power, Reliance Capital, Reliance Infra, HEG, Indiabulls Venture, Graphite Industries, Dish TV have lost over 65 percent in the last 1 year.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions

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Pakistan closes 3 air routes for Indian carriers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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 Amid rising tension between India and Pakistan over the revocation of Article 370 of the Constitution ending special status to Jammu and Kashmir, Islamabad has closed down three out of nine air routes for Indian carriers.

The move, second this year, would affect national carrier Air India’s flights going to Europe, the US, and Middle East among others.

Flying time of around 50 flights will increase by about 10-15 minutes.

“The major route which we use for our long haul flights are still open and hence the impact is not much right now but we have got initial inputs that the remaining air routes will be shut.

“The impact will be huge as flying time for our ultra long haul flights using Pakistani airspace would increase by 2-3 hours,” a senior Air India official told IANS.

The flag carrier had suffered a massive loss of Rs 430 crore due to another air space closure by Pakistan following the Balakot airstrike by the Indian Air Force in February.

The current closure of air space is being seen as retaliation by Pakistan to India’s decision ending the autonomy given to the state of Jammu & Kashmir.

On Wednesday, Pakistan downgraded diplomatic ties with India and also suspended trade. It has also told India to withdraw its High Commissioner to Pakistan.

While the air space closure would affect Indian carriers, Pakistan is also expected to take massive financial hit. During the earlier round of air space closure, Pakistan is estimated to have lost about Rs 850 crore in overflying charges from various carriers passing through its territory.

The relations between India and Pakistan has touched a new low since Monday with Pakistani Prime Minister Imran Khan threatening of even a conventional war over the issue of Kashmir.

Following India’s move to reorganize Jammu and Kashmir into Union Territories of J&K and Ladakh, Pakistan on Wednesday held a meeting of its National Security Committee to discuss its next course of action to deal with the new developments.

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City Union Bank expects 18% loan growth in FY20

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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City Union Bank has reported a net interest income (NII) growth of 11.2 percent while its profits were up by 14 percent in the first quarter of FY20. However, margins are down on sequential basis and asset quality too has deteriorated, so gross non-performing assets (NPAs) are up 10 percent on sequential basis on account of elevated slippages.

Discussing the Q1 numbers and the company’s outlook going forward, N Kamakodi, managing director and chief executive, City Union Bank, in an interview with CNBC-TV18 said that they expect the slippage ratio to be between 1.75-2 percent of closing advances for FY20.

With regards to loan growth, he said for the year as a whole it is expected to be around 18 percent. In the first quarter of FY19 loan growth was around 15 percent and in Q1FY20 as well it is around 14 percent, he added.

He said that the decline in credit deposit ratio impacted net interest margins (NIMs) in Q1 but there has been no major difference in yield or costs that have impacted NIMs.

So far transmission of rate cut has been to the tune of 25 basis points by the bank and expect some more transmission in the near future, said Kamakodi.

Micro, Small and Medium Enterprises (MSMEs), agriculture and commercial trading of wholesale and retail constitutes about two-third of the loan book but so far they have seen no major stress in the SME portfolio, he said.

He also said that the bank does not have any exposure to stressed groups.

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Emerging market currencies to bounce back from trade war jitters

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Battered emerging market currencies will eventually bounce back from their beating in the past week on worries about the US-led trade war, but risks remain for currencies of commodity exporters inextricably linked to China, a Reuters poll found.

For the first time in more than a decade, China on Monday let its currency breakthrough 7 per dollar, a key support level, in a sign Beijing might be willing to tolerate even more weakness in retaliation for tariff threats from Washington.

This sent shock waves through risky currencies such as South Africa’s rand and Brazil’s real, which has lost over 3 percent since Thursday. But foreign exchange strategists polled this week are optimistic that by this time next year, most will have recouped those losses.

“Our top-down EMFX forecast now suggests currencies will first weaken in three months’ time, then appreciate modestly in 12 months,” noted Dirk Willer, head of emerging market strategy at Citi. “The Fed and the global growth story, along with U.S.-China trade tensions are likely to remain drivers in the near term.”

Still, recent performance just magnifies what has been a lacklustre year so far for emerging market currencies.

The Reuters poll last month suggested these currencies had probably seen the best of a lukewarm year against the dollar as U.S. President Donald Trump was then expected to back-pedal on his conciliatory tone from the recent G20 summit.

Trump did exactly that last week, and emerging market currencies showed similar weakness to last year’s crazy August selloff, now seemingly looking ominously cyclical, but this time last year global growth was in question due to the trade war.

Emerging market currencies have underperformed more broadly in the past couple of years as rampant Chinese demand for raw materials waned and stimulus from asset purchases trickled off, first by the Federal Reserve and then the European Central Bank.

Trump’s surprise move on Thursday to impose new tariffs on Chinese imports may eventually force the Fed to cut rates more than it had hoped was necessary, keeping rate differentials attractive to emerging markets.

“We think countries with high-interest rates are likely to find it easier to attract capital flows due to the hunt for yield,” Renaissance Capital wrote in a note to clients.

Local problems in some countries have become more pronounced too, exposing deep structural problems irrespective of the global backdrop. In South Africa, President Cyril Ramaphosa is faced with serious fiscal troubles, while in Brazil, growth is expected to slow in 2020 despite pension reforms.

Though forecasters expect the rand to recover its recent losses, it remains a currency easily beaten down in times of heightened risk aversion, despite the fact, it’s gold mining companies often benefit in times like this.

Gold is at a six-year peak as investors continue to pile into safe havens to hedge against heightened US-China trade tensions.

However, like most emerging market central banks, Russia is likely to lower interest rates this year faster than previously thought as economic growth is on track to undershoot official forecasts.

The beaten-down Turkish lira will struggle over the next 12 months, the Reuters poll suggests.

The year ahead outlook for the yuan, which was taken just as the de-escalation in trade tensions between the U.S. and China took place, still showed it could rise as much as 11 percent in the next 12 months.

But after the recent political developments, currency strategists said it was difficult to get an idea about where the currency was headed and so forecast revisions are likely soon.

Rafiq Raji, chief economist at Macroafricaintel in Lagos, said it is plausible the Chinese authorities may now just want to wait and see if Trump wins a second term in 2020. “For investors, I wouldn’t advise such fatalism.” he added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

US senator seeks unannounced inspections of foreign drug manufacturing units in India, China

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Senior US Senator Chuck Grassley has urged the Trump administration to “reinstate unannounced” inspections of prescription drug manufacturing facilities in foreign countries, especially in India and China. The chairman of the Senate Finance Committee said this was needed as these facilities provided most of the ingredients for production inside the US.

In the light of the administration’s new “Safe Importation Action Plan”, Grassley, said it was important to determine more accurately if these facilities meet set standards of quality and safety for both domestic and importation purposes.

“Unbeknownst to many consumers …80 per cent of active pharmaceutical ingredients are produced abroad, the majority in China and India; however, the FDA only inspected one in five registered human drug manufacturing facilities abroad last year,” he said.

Grassley raised the issue in a letter, dated August 7, to Department of Health and Human Services (HHS) Secretary Alex Azar and Food and Drug Administration (FDA) Acting Commissioner Norman Sharpless.

“I strongly encourage the administration’s demonstration projects to include unannounced inspections in foreign manufacturing facilities to determine whether they meet the required active pharmaceutical ingredients and drug quality and safety standards to include sufficient record-keeping, testing and protections against counterfeiting,” the senator said.

Grassley had also sent a letter in June to Azar and Sharpless on the issue. The senator has sought information on the quality controls for prescription drugs and their components manufactured in foreign countries, specifically China and India.

He also asked what the FDA is doing to uphold safety standards in the US, China and India via inspections of manufacturing facilities.

Reports have noted that 80 percent of active pharmaceutical ingredients are produced in China and India and that facilities in those countries have not maintained adequate quality control standards, according to the letter.

“Since my June 2019 letter to the FDA, I have learned that the FDA does not track in its databases whether a foreign inspection was subject to an announced or unannounced visit,” he wrote.

Further, the FDA generally does not perform unannounced visits of drug manufacturing facilities in foreign countries but does perform unannounced visits at facilities based in the United States, Grassley rued.

Should the administration’s action plan be put into effect, the administration must require more foreign inspections generally and unannounced inspections specifically, particularly compared to previous administrations, he added.

“For example, in 2013 the FDA created a pilot programme in India that eliminated advanced notice and instead used short notice or unannounced visits.

“The pilot program also arranged for FDA inspectors’ travel to be arranged through the US embassies instead of through FDA offices or manufacturer-arranged travel plans to provide more secrecy in the lead-up to inspections,” Grassley said.

According to reports, the new inspection regime “exposed widespread malfeasance” that had otherwise been hidden because of the advanced warning system, he said.

Among the findings, the inspections found bird infestations, missing samples, and fake laboratories, all of which negatively impact drug quality and safety. Under the pilot program, the FDA issued a 60 percent increase in “Official Action Indicated” findings, Grassley said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow