Month: October 2017

India isn’t ‘fast enough’ in reforming troubled banks, says Bain executive

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

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The Indian government is not reforming its banking sector quickly enough, as troubles such as high levels of bad loans hold back economic progress, a top consultant told CNBC on Thursday.

Prime Minister Narendra Modi’s administration has done “many good things” such as implementing a goods and services tax and a new bankruptcy law, according to Srivatsan Rajan, chairman of Bain & Company India. But, he added, increasing the banks’ ability to lend is what will get the economy going again.

“If there’s one thing I would say the government does not move fast enough, is really on the reform of the banking sector — whether you call that the recapitalization of banks or just finding ways to ease the flow of money to companies,” he said on the sidelines of the World Economic Forum’s India Economic Summit in New Delhi.

“Credit growth has been very, very poor. It is one of the reasons that one should be concerned about the state of the economy. I think there are many other good things, but credit growth needs to increase for the economy to really get going again,” he added.

The banking sector has grappled with the increase of non-performing assets and rising credit costs for much of the past six years, Goldman Sachs analysts said in a note last week. As a result of those troubles, banks have not been able to grow their loan supply to spur economic activity in the country.

India’s growth slowed to a three-year low of 5.7 percent in the April-to-June period, official data showed. Many analysts blamed the goods and services tax introduction and Modi’s controversial move to ban high-value notes — known as demonetization — for the slowdown.

Rajan said the two moves would be beneficial in the long term, but the economy is taking longer than expected to adjust to those policies. Fitch Ratings on Monday trimmed its growth forecast for the year to 6.9 percent from its previous projection of 7.4 percent.

“Both [ goods and services tax] and demonetization I think are necessary steps but it’s taking longer for the structural impact, the benefits to play out than a lot of people have anticipated,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

Dow notches 5-day winning streak as stocks close at record highs

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

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US stocks closed higher on Tuesday, building on strong gains from their previous session.

The Dow Jones industrial average rose 84.07 points to 22,641.67, setting intraday and closing records, with 3M contributing the most to the gains. The 30-stock index also posted a five-day winning streak.

The S&P 500 finished 0.2 percent higher at 2,534.58 and notched a record close; it also rose for the sixth straight session. Airline stocks Delta and United Continental were the best performers in the S&P, advancing 6.6 percent and 6.1 percent, respectively.

The Nasdaq composite advanced 0.2 percent to close at 6,531.71, and also hit a record high.

“I think this rally is probably going to extend itself,” said Peter Cardillo, chief market economist at First Standard Financial. “There are a lot of challenging factors out there, but equities seem to brush that aside.”

“If we have a positive week, that could set the tone for what we could see the rest of the year,” Cardillo said.

Stocks posted record highs across the board on Monday, led by strong gains in health care and financials.

“I think the market is expecting a benign environment with interest rates where they are at,” said Bob Phillips, managing principal at Spectrum Management Group. “Tax reform is still in the air, … so that’s helping keep a floor on stocks.”

While some Wall Street experts have expressed concern over equity valuations, billionaire Warren Buffett said they made sense given where interest rate are. Buffett said rates have been a “powerful factor” in equity values.

The Federal Reserve has raised interest rates twice this year, with investors largely expecting a third rate hike in December, according to the CME Group’s FedWatch tool.

The central bank “has somewhat of a reputation as the matador that dispatches bull markets with the sword of policy mistakes,” said Nicholas Colas, co-founder of DataTrek Research, in a note to clients. Colas added, however, he does not see this happening. “Short-term rates are still very low by historical standards. And long-term rates seem fine with the Fed’s stated balance sheet reduction goals.”

Treasury yields fell on Tuesday. The short-term two-year yield slipped to 1.47 percent, while the benchmark 10-year yield fell to 2.33 percent.

In economic news, monthly auto sales data were being released throughout the day. General Motors, Ford, and Fiat Chrysler were among the automakers who reported better-than-expected sales.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

Asia mixed in early trade ahead of Reserve Bank of India policy decision

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

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Asia is set for a mixed trading day on Wednesday, even after US equities closed higher overnight.

In Japan, the Nikkei 225 was up 0.23 percent at 20,662.48 in early trade and the Topix index advanced 0.1 percent.

Fast Retailing shares were up 1.73 percent after reports said same-store sales at its Uniqlo retail outlets in the country rose 6.3 percent on-year in September.

Meanwhile, shares of Japan Display rose 14.48 percent following a report from the Nikkei business daily that the company intends to begin mass production of small OLED panels for smartphones as early as 2019.

Its affiliate, JOLED, has plans to begin printing midsize and large OLED panels for industrial equipment and televisions, Nikkei said.

The Japan business daily also said Japan Display began looking for a partner with which to split its smartphone panel investment that is expected to be more than $1.77 billion.

Australian stocks slipped, with the benchmark ASX 200 down 0.6 percent at 5,667.40 in morning trade. The energy subindex was down 1 percent and the heavily-weighted financial sector fell 0.78 percent.

Major Australian banking stocks were lower, with ANZ shares tumbling 1.51 percent, Westpac off 1.15 percent and the National Australia Bank lower by 1.08 percent.

“The Australian share market faces a test today,” Michael McCarthy, chief market strategist at CMC Markets, said in a morning note. “After underperforming major markets in September, weakness returned in trading yesterday.”

McCarthy added that the “potential for a negative day looms if the top down sellers return.”

Markets in China and South Korea remain closed for public holidays.

Meanwhile, the Reserve Bank of India’s (RBI) monetary policy decision is due on Wednesday. Many analysts expect the central bank to stay on hold, keeping the repo rate at 6 percent.

A Reuters poll found that, though the RBI is set to leave the repo rate unchanged, many economists believe the central bank may downgrade its growth forecast following the implementation of the new goods and services tax in the country.

“There is pressure on the committee to ease rates, given that the repo rate is at 6 percent versus below-4 percent CPI inflation,” said Radhika Rao, an economist at Singapore-based DBS Bank, in a note. “The RBI is, however, unlikely to react this week as besides a gradual rise in inflation, significant changes in the macro backdrop also need to be assessed further.”

The Indian rupee will be in focus. The currency last fetched 65.48 per dollar.

Elsewhere in the currency market, the dollar index, which measures the greenback against a basket of currencies, remained at levels similar to the previous session. At 8:15 a.m. HK/SIN, the index stood at 93.552.

Meanwhile, the Japanese yen traded at 112.72 per dollar, strengthening from levels near 113.1 in the previous session.

“There wasn’t much consistency in the performance of the dollar and while dollar/yen failed to end the day above 113, it also did not experience significant losses,” Kathy Lien, managing director of foreign exchange strategy for BK Asset Management, said in an early morning note, referring to overnight moves in the foreign exchange market.

Lien said the dollar’s “quiet strength suggests that investors are optimistic and it’s hard not to be with stocks hitting fresh record highs Monday and Tuesday.”

Elsewhere, the Australian dollar climbed from levels near $0.78 in the last session to trade at $0.7845 on Wednesday morning.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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

Asia trades mixed ahead of Reserve Bank of Australia policy decision

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

Listen to the Article (6 Minutes)

Asia markets were mixed in early trade on Tuesday, despite US equities closing at record highs overnight.

Japan’s Nikkei 225 climbed 0.32 percent to 20,465.83 and the Topix index rose 0.39 percent to 1,680.11.

In Australia, the ASX 200 dipped 0.31 percent to 5,711.70 in early trade. The Australian dollar traded at USD 0.7827, which was a level similar to last Friday.

Traders will be looking ahead to the monetary policy decision from the Reserve Bank of Australia due at 2:30 p.m. local time.

“Most of the focus today will be on the RBA … and what the statement says about the economy, including any amendment to their language on the dollar other than to recognize the recent mini-rally in the USD,” David de Garis, director of economics at the National Australia Bank, wrote in a morning note.

“This part of the statement will require some re-jigging, if only to refresh it for the recent pull back in the Aussie,” he said, adding the bank expects the central bank to “continue acknowledging the evolving improvement in the domestic economy” and give the RBA “more confidence that growth is building.”

Major Australian banking stocks were mixed, with ANZ shares up 0.5 percent, Commonwealth Bank down 0.05 percent and the National Australia Bank declining 0.14 percent. Resources producers were mixed, but major miners Rio Tinto and Fortescue gained 0.18 and 0.48 percent, respectively.

Markets in South Korea and China remain closed due to public holidays.

In the currency market, the dollar index, which measures the greenback against a basket of currencies, last traded at 93.663, rising from levels below 92.500 in the prior week. At least one analyst said this week that the rally in the dollar is likely due to a “short dollar positioning squeeze instead of a real turn.”

Among other currency majors, the Japanese yen fetched 112.75 per dollar, similar to levels late last week. The euro traded at USD 1.1732.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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