Month: November 2017

There could be a multitrillion-dollar opportunity waiting in India: Morgan Stanley

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

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India’s push to digitize has seen its economy undergo massive changes, but that presents a multitrillion-dollar investment opportunity as both tax compliance and access to credit increase, according to Morgan Stanley.

Prime Minister Narendra Modi’s push to digitize the Indian economy has seen the introduction of Aadhaar — a unique identification number based on biometric information issued to residents of India — and attempts to reduce dependency on physical cash, although last November’s surprise demonetization drive caused plenty of disruption.

Still, as the Indian economy returns to a sense of normalcy, the country could be set to reap the benefits of those reforms.

“The good thing with digitization, apart from bringing more cash into the economy … is credit,” Anil Agarwal, head of Asian financial research at Morgan Stanley, told CNBC on the sidelines of the bank’s Asia Pacific Summit in Singapore.

India’s problem, Agarwal explained, was that most lending that occurred in the formal sector went to large corporations or mortgages as banks did not have access to data on individuals or small and medium enterprises (SMEs) that wanted to take out loans.

As the adoption of digitization improves, tracking the credit history of individuals or SMEs is expected to become simpler and that’s likely to give a boost to the economy.

“[T]hat will allow banks to be able to lend much more effectively, so the credit will flow to the right part of the economy,” Agarwal said.

“Our view is that that creates employment opportunities, that increases GDP per year by about 50 to 75 basis points, so GDP growth [on a] real basis is 7.1 percent, nominal is around 11 percent. That means economy and markets can do very well,” he added.

Morgan Stanley forecasts India’s GDP to reach $6 trillion in 2027 as a result of its digitization drive. That would make India the third-largest economy in the world, behind the U.S. and China, which recorded $18.5 trillion and $11.2 trillion in GDP, respectively, last year.

Digitization also paves the ways for the country’s equity market to become one of the world’s five largest, with a market capitalization of $6.1 trillion.

The bank isn’t the only one optimistic about the impact of Modi’s reforms on the country either.

India’s sovereign rating was upgraded by Moody’s Investors Service for the first time in 14 years to Baa2 from Baa3 on Friday. “The decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential,” Moody’s said.

The rating agency highlighted the new Goods and Services Tax as a measure that will “promote productivity,” and it noted that the Aadhaar system and demonetization helped to “reduce informality in the economy.”

Nevertheless, Agarwal acknowledged that it could take some time for those in India’s massive informal economy to adopt digitization.

“It will take some time because it is a material change in habits, material change of business model … but I think over the next 12 to 18 months, by fiscal 2019 or early 2020, I think you’ll start seeing those changes,” he said.

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Indian finance minister says India is on track to grow more than 7% in 2018

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

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India should be able to return to its “normal” growth range by next year as the short-term fallout from a new goods and services tax plan and last November’s currency ban ebb, the country’s finance minister told CNBC.

The Indian economy grew at its slowest pace in three years between April and June at 5.7 percent. A Reuters poll conducted in October showed economists predict South Asia’s largest economy will grow by 6.7 percent in the fiscal year ending March 2018.

“I see the Indian economy picking up quite well,” Arun Jaitley told CNBC, adding that the negative impact on growth from demonetization and tax reforms appear to have bottomed out.

“All indications do indicate that we will certainly improve, and whatever is the “Indian normal,” other factors remaining the same, we should be able to grow between that 7-8 percent range,” he said.

Worst of demonetization is over

Last November, India unexpectedly announced all 500 and 1,000 rupee banknotes would be withdrawn from circulation, replaced by new 500 and 2,000 rupee denomination notes. The move caught most people off-guard and led to a massive shortage of cash around the country.

While Jaitley acknowledged that India’s decision to squeeze out a large portion of its high value currency temporarily affected growth, he said the worst of it was “long over.”

He also pointed to the benefits that came about as a result of India’s demonetization efforts. Jaitley said it allowed the government to put digitization of the economy — an important aim for Prime Minister Narendra Modi — as a center-stage issue and allow for more cashless transactions.

The move also opened new funding sources for the economy. “We’ve been able to increase the tax base as far as the Indian economy is concerned,” he said, adding that there have also been an increase in the number of deposits in banks.

“Today, the banks have more funds to lend even to the [small-and-medium businesses], providing we are able to recapitalize the banks,” Jaitley said.

That said, many economists and analysts have said the real impact of demonetization was felt in India’s large informal sector, where most transactions are done in cash.

When asked how the move affected the informal sector, Jaitley said there wasn’t a “lasting impact” since “remonetization took place within a matter of weeks.”

But experts have said that India’s quarterly statistics — including its gross domestic product figure — use data on organized sectors as a proxy of the country’s unorganized sectors, meaning the numbers may not accurately reflect the impact of demonetization.

Positives from the tax reform

The other main factor affecting India’s growth outlook was the goods and services tax — India’s most ambitious economic reform plan in 70 years. It was rolled out only on July 1, but according to Jaitley, manufacturing slowed down in the months leading up to it because “people were de-stocking.”

The new goods and services tax replaces a thicket of indirect central and state levies that critics argued had blunted economic competitiveness and hobbled efforts to lift more out of poverty. The reform introduced four main tax rate bands on goods and services: 5-, 12-, 18-, and 28 percent irrespective of the location of purchase.

Jaitley said that, in the first few months since the plan was rolled out, the tax receipts collected had been “fairly okay.” Big and medium-sized businesses have adjusted well, he added, but smaller businesses — typically more reliant on cash — will “obviously take some time.”

“Therefore, we are giving them time in terms of compliance burdens,” he said. “I do see people will take time in adjusting to the new setup, and therefore, we are moving slowly in implementing some of the eventual steps which are a part of the [goods and services tax] itself.”

He pointed to several positives that came about from the reform. “The decision-making process of the [goods and services tax] has matured itself. The Council is functioning very effectively. You have a common market which has been created. You have all the barriers which have been removed,” Jaitley said.

In order to get states to comply with the reforms, Jaitley said they were promised a 14 percent yearly increase in tax revenue for the first five years.

“I’m quite sure we’ll be able to maintain that,” he said.

Below is the transcript of the interview.

Q: High oil prices – is that going to squeeze public finances?

A: If the oil prices are extraordinarily high, certainly that impacts us adversely. But up to a level at which they have reached now, is something which we can bear the shock. If it rises extraordinarily, it will be another thing.

Q: How would you define that? At what price points does it come a problem for Indian finances?

A: I don’t think we have a cut off. As it is, when the prices started rising, we had to shed off a little part of our central taxes. Every part of the central taxes that you shed off means lesser revenue for the government, and therefore that has an adverse impact on us. Hopefully if it remains range bound within this range, we can live with it.

Q: In other words, moves over USD 70, possibly USD 75 a barrel would hurt Indian finances?

A: Certainly the higher it goes – it’s not a great news for us at all. I hope it doesn’t rise to that level again.

Q: Demonetization, have we seen the worst of it, in terms of the impact on the broader Indian economy and can growth recover in 2018?

A: I think we have seen the best of it. Whatever adversity had to come, I think it’s long over. Demonetization in India, in the first instance has met – that we have been able to squeeze in the very first year, a large part of the high value currency, we have been able to put digitization of the economy as a centre stage issue as far as the economy is concerned, which means more digital transactions, less cash-based transactions. We have been able to increase the tax base as far as the Indian economy is concerned. We have seen a very large number of deposits come into the banks and consequently, whether it’s the stock market, or mutual funds or insurance policies, we have seen a larger amount of funding available. Today, the banks have more funds to lend even to the SMEs, provided we are able to recapitalize the banks.

We have also seen a lot of squeezing of the terrorist funds taking place in Jammu and Kashmir and Chhattisgarh. A step like demonetization can temporarily have some impact on growth.

Q: Especially on the informal economy.

A: Yes on the informal economy. But that’s not a lasting impact because the remonetization took place within a matter of weeks itself and therefore, that is an adversity which you can easily reverse.

Q: Can we say then that we can see a return to 7 percent plus growth rates for India?

A: I think it bottomed out with the demonetization, and then the GST coming back-to-back, because even in the short run, as far as the GST is concerned, manufacturing for some months stopped because people were de-stocking and I think that phase is over. So the bottoming out is complete and now we should see a curve for the better.

Q: What’s your outlook for 2018?

A: I see the Indian economy picking up quite well. All indications do indicate that we will certainly improve and whatever is the “Indian normal”, other factors remaining the same, we should be able to grow between that 7-8 percent range.

Q: If we can talk about GST harmonization, and the move towards a common market, tell me about rollout, implementation, and what that’s going to do for tax receipts and tax collection and generation?

A: I think it is early days for GST. There are a few positives I think which we have scored. The decision making process of the GST has matured itself. The Council is functioning very effectively. You have a common market which has been created. You have all the barriers which have been removed.

Q: How well has business adjusted?

A: I think the big businesses have adjusted quite well, the medium businesses have adjusted well. The smaller businesses, obviously will take some time, therefore, we are giving them time in terms of compliance burdens etc. The first few months, the tax receipts have been fairly okay. But I do see people will take time in adjusting to the new setup, and therefore we are moving slowly in implementing some of the eventual steps which are a part of the GST planning itself.

The harmonization of rates, in fact, has become much faster than what people expected, and therefore our first effort to harmonize the 28 percent rate and bring most of the items down to 18 percent, is a step we have broadly accomplished, and that’s a harmonization exercise depending on how the revenue buoyancy takes place, which will probably continue.

Q: In terms of revenue position for India, what targets do you have?

A: The central government has its budgetary targets. Therefore we want to keep up with those budgetary targets. As far as the states are concerned, we promised them a 14 percent increase every year under the GST for the first five years, I am quite sure we will be able to maintain that.

Q:  If we can talk about financial stability concerns in India, have we seen the high-water mark in terms of NPAs or non-performing assets that are held by the state-run lenders?

A: I think it is a legacy problem which I had inherited, and it is a problem which had continued for a very long time. Both the central bank and the government had attempted various solutions to it. Many of them turned out to be short-lived solutions, or band-aid solutions which really did not resolve the problem. I think now the two major steps that we have taken, one is the Insolvency and Bankruptcy Code (IBC) being put into action – the insolvency proceedings, and a number of cases being referred to it, some more to be referred to it in future, and therefore resolutions being reasonably in sight, I think is a good ray of hope. Coupled with the fact that we decided to recapitalise the public sector banks, I think if the two moves, the two big moves are taken together, I think the vitality of the banks itself will get restored.

Q: Do you think demand for credit will start coming back as well?

A: I think as far as the large companies are concerned, they already have been borrowing from the bond market, from international markets and so on. It is the SMEs which were really impacted, and therefore, one of our emphasis after the recapitalisation is going to be for the PSBs to have a special focus as far as the SMEs is concerned.

Q: So more incentives to try and get them to borrow?

A: Yes borrow, because they are the ones who are creating the jobs, they are the ones who keep the real economy moving.

Q: Why do you think demand for credit has been so subdued?

A: I think demand for credit was subdued because in the post-boom period, a large number of companies after that indiscriminate lending, had expanded themselves beyond a point, and there was no demand. So that unutilised capacity is now being filled up. Once that happens, I think more demand will come up from that sector.

Q: There have been some concerns raised about India’s growth rate. You have made the point that these are related to pre-GST issues and these are one-offs etc. Some, however, feel that India needs a stimulus package, does it?  

A: I think it would be an overstatement to say that you need some form of a stimulus package. You need an adequate response to the challenges. I think that the whole series of reform steps we have taken, coupled with the recapitalisation, is a response under the circumstances. My own view is that slowly we have bottomed out that 5.7 percent in the last quarter and now I think we should start moving up somewhat. If you see some of the latest data, the PMI has been positive, the IIP has been positive, the core sector growth has been positive, and therefore these are all positive indications coming from the market.

Q: That being said, where does the priority lie from the finance minister’s point, and ministry’s point of view, on fiscal consolidation or pro-growth spending?

A: I think you have to balance between the two. In an economy where public spending is extremely important, the governments must spend, and must spend more, but at the same time you can’t afford to be reckless and do away with all kinds of fiscal prudence. My own experience is that markets reward fiscal prudence and therefore we have maintained a reasonable amount of fiscal discipline. Depending on the revenue available in a given year, your glide path can be modulated, but to deviate from it completely, is something which we don’t intend doing.

Q: Do you think you can hit your target for the Budget deficit for current fiscal and the next fiscal?

A: My effort will be to aim in that direction.

Q: That is for the current fiscal, and what about the next fiscal year?

A: The next fiscal is an easy target, in the sense that it is targeted to go from 3.2 percent to 3 percent.

Q: How worried are you about the risk of a downgrade by the ratings agencies if India doesn’t get the fiscal house in order?

A: I don’t think that possibility arises. I think we were by and large, over the last three years shown a considerable amount of fiscal prudence. It has never been as good in history as it has been in the last three years. We will try and maintain the glide path to the extent which is possible.

Q: The other strategy is to privatise, is to sell stakes in state owned companies, and I want to talk about Air India which is widely seen as the company that is going to really set the tone. Are you finding buyers for the government stakes in Air India?

A: We are on the verge of appointing a transaction advisor who will then analyse the entire market and see what is the universe of buyers which is available. Once we have a clear idea about the universe of buyers which is potentially available, we will be announcing the terms of the privatisation itself.

Q: At this point, can you disclose any of the buyers, their identities, any of them who have come forward?

A: I don’t think it will be prudent to do that. There are some people who have made enquiries, who have shown an expression of interest.

Q: Domestic or foreign?

A: It could be a combination of both. However, I would rather wait for them to make a specific offer once the field opens for that.

Q: And if we could circle back to the taxation issue. There was a story of a wealth tax, of a tax being imposed on the rich and the super-rich. Is that still an issue that you are discussing?  

A: If you remember, wealth tax is a tax which I had abolished two years ago and I don’t see the possibility of it coming back. On the contrary, we had imposed some extra income tax on the super-rich which more than covered up for the revenue that we lost on that. We were getting about Rs 900 crore on wealth tax, and we were running a complete department for that purpose. So rather than that, we had a surcharge on the super-rich which gave us more money without the accompanying harassment.

Q: Is a tax amnesty part of the plan?

A: We have just had a year and a half ago an income declaration scheme (IDS) scheme. I don’t think you can repeatedly have IDS schemes.

Q: The final question is about monetary policy. RBI policy settings do you believe that they are appropriate?

A: I have always said that finance minister’s normally like the rates to go down. But then, this is something which is in the domain of the central bank and the central bank is a responsible institution which balances the considerations for inflation, growth, they take every factor into consideration and come out with a considered opinion.

Q: In your considered opinion, do we need lower rates in India given the fundamentals?

A: I certainly believe yes, but at the same time I would continue to respect the opinion of the central bank.

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Chinese investors are stealthily pouring money into India

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

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If you go by official Indian government figures, Chinese direct investments into the country this century hit a paltry $1.6 billion in March 2017.

That’s a weak showing compared to President Xi Jinping’s 2014 promise to spend $20 billion over five years in India, one of the fastest growing Asian economies.

But while there’s yet to be big bang investments accompanied by political fanfare, the Chinese have steadily and quietly been investing in Indian companies over the past few years.

In fact, people in India who work closely with Chinese businesses estimate that China’s investments into the country could be at least five times greater than official numbers.

“Chinese investments have doubled in the last two years. I have no reason to doubt that it will not continue as they have already tasted blood. If you are a Chinese company today with a limitless amount of capital and you look at the whole world and ask ‘where is the big bet you can play?’ the answer is India,” said Santosh Pai, a partner at Link Legal, a law firm with offices throughout India.

For his firm, Chinese clients are the growth drivers, and since 2011 he has helped about 150 of them get a foothold in the Indian market.

Typically, investments come in from Chinese-owned companies based in the U.S., Singapore or elsewhere in the world, and therefore cannot be classified as “Chinese” investments. Also, official data only tracks investments made by companies based in mainland China and not even those out of Hong Kong and Macau, experts said.

Low key, high returns

While businesses are happy to get Chinese money, it is in no one’s interest to publicise those investments given the history of Indo-China relations. The two countries have fought a war and have regular skirmishes on their shared border.

“If a Chinese company says, ‘We have entered the Indian market,’ they will attract more scrutiny. If Indian companies say, ‘We have Chinese investors,’ they may lose some goodwill. It is not a conspiracy to hide these things, but the question is: Who does it benefit to stand on the roof and shout out?” Pai told CNBC.

A case in point is the recent investment of $1.1 billion by Shanghai Fosun Pharmaceutical Group for a 74 percent stake in India’s Gland Pharma. The Chinese major that had struck a deal in July last year to buy an 86 percent stake in the Indian generic injectable drugmaker, reduced its stake size in a bid to save the stalled deal. The deal had raised concerns among some in the Indian government, Reuters reported.

India allows foreign investment of up to 100 percent in its pharmaceutical sector, anything above 74 percent requires government clearance.

“Investments that are not administered or influenced by government perception are pouring in,” Aravind Yelery, assistant director at the New Delhi based Institute of Chinese Studies, told CNBC. “The Indian state governments are wary of the Chinese, so they are now doing [mergers and acquisitions] and [joint ventures] in the private sector. No mainstream, huge infrastructure investments.”

Boosting start-up morale

Instead, Chinese investors are coming into India with bite-sized deals of as little as $1 million for start-ups. The big spenders on that front have included Tencent and Alibaba. The two have invested $1.2 billion and $650 million, respectively, in venture capital and private equity deals over the past two years, according to data from tracking firm Venture Intelligence.

That influx of funds has had a notable result in the Indian start-up community.

“The Chinese are boosting morale. There is a sudden change in the perception of Indian investors as well. If the Chinese are putting money into Indian start-ups, so will I, is the feeling,” said Rishabh Lawania, co-founder of Xeler8, a start-up bought by a Chinese fund in January this year.

Xeler8 was a data mining company, but after the buyout it functions as a venture capital fund and incubator for start-ups.

“The Chinese are here with deep pockets. It is not uncommon for them to write a million dollar check for a first stage investment. An Indian angel investor is not going to do that. He will invest one fourth that amount,” said Sunil Kalra, a veteran investor in Indian start-ups.

About $3.5 billion has been invested in companies less than 10 years old so far in 2017, according to Venture Intelligence. The Chinese have contributed a little less than 10 percent of that.

India’s start-up sector, though still the third-largest in the world, has been facing a funding crunch and Chinese money has come as a boon for new entrepreneurs who are feeling the squeeze the most, says Lawania.

But there’s even more of an upside to Chinese investment for companies that see it as a ticket to access the huge China consumer internet market.

For travel marketplace Ixigo, an investment from China’s Fosun Kinzon Capital “has opened the gates of access to Chinese internet companies and China-based investors,” said company co-founder Aloke Bajpai.

He added that he and his partners visited China and “saw for ourselves how scale and efficiency have driven excellent returns for shareholders in that market.”

Despite those positives, the exuberance over Chinese micro capital and bigger investments in sectors like pharmaceuticals and solar energy took a hit few months back. Political tensions between the two Asian rivals escalated owing to a standoff in a disputed border area, and while business was almost as usual, the sentiment was affected, insiders said.

Two large Chinese funds that recently invested in Indian start-ups declined to be part of this article. The India head for one of those funds said, “Let things settle down a bit, then will do more [public relations].”

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Govt may advance planned PSU bank capital infusion of Rs 10,000 crore

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

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The government may infuse an additional Rs 10,000 crore in public sector banks in FY18 itself, thereby advancing its FY19 capital infusion plan, CNBC TV18 reported citing sources.

In addition to direct infusion of capital, the government will also be issuing recapitalisation bonds to PSU banks, the first tranche of which will consist of bonds worth around Rs 70,000 crore.

All banks will be covered under the recap bond issuance, which includes both growth capital as well as regulatory capital to cover provisioning.

In line with the government’s instructions, public sector banks may start tapping markets from December onward since government approval is already in place. Banks may opt for a qualified institutional placement (QIP) and follow-on public offerings (FPO) of up to Rs 2,000 crore each.

Over 67 banks have been shortlisted to be issued recapitalisation bonds. The quantum of capital infused will be based on three-year CAGR and growth projections, sources said.

This additional infusion will come out of the Indradhanush scheme, which offers over Rs 20,000 crore of budgetary support to PSU banks from the government.

Finance Minister Arun Jaitley had announced a PSU banks recapitalisation plan of Rs 2.11 lakh crore on October 24 in a bid to shore up their finances, boost private investment and revive the economy. The plan is expected to be spread over two years to bolster banks’ finances and revive the economy and is the largest such undertaking in India to date.

The government has been in discussion with the Reserve Bank of India and other banks for the bond issue and the amount to be raised for the first tranche is yet to be fixed.

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Warren Buffett adds to Apple stake, bails further on IBM

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

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Warren Buffett’s Berkshire Hathaway bought more Apple shares before their latest jump to all-time highs.

Berkshire also cut its stake in IBM by 32 percent, or 17.06 million shares, in the third quarter, according to a required quarterly filing with the U.S. Securities and Exchange Commission released Tuesday. The stock is the third-worst performer in the Dow Jones industrial average this year, down 10.3 percent.

Buffett’s conglomerate increased its holdings of the iPhone maker’s stock by 3.9 million to 134.1 million, the filing showed.

Apple hit a record high last week and is up nearly 11.2 percent this quarter, following the launch of the iPhone X. The stock has rallied nearly 48 percent this year.

Berkshire also increased its holdings in Synchrony Financial and Monsanto, and reduced its investments in Charter Communications and Wells Fargo in the third quarter.

The filings reflect Berkshire’s positions more than a month ago and may have changed since.

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Donald Trump wants to make India the core of his Asia strategy – but he needs to know a few things first

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

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President Donald Trump’s landmark Asia trip, which concluded on Tuesday, revealed his growing reliance on India as a strategic partner in the region.

But if Washington wants Prime Minister Narendra Modi’s administration to be at the core of its Asia policy, it must help New Delhi on issues crucial to its own future, experts said. Those include supporting Indian membership in the Asia-Pacific Economic Cooperation forum and assisting with New Delhi’s other geopolitical concerns.

India and the Indo-Pacific

Trump’s frequent use of the term “Indo-Pacific” as a replacement for “Asia-Pacific” — the more widely used label in diplomatic and business circles — revealed the level of importance Washington places on New Delhi.

During a speech in Vietnam, the U.S. leader highlighted his desire for a “truly free and open Indo-Pacific,” repeating the term after Secretary of Defense James Mattis and Secretary of State Rex Tillerson used it in earlier remarks.

The label’s usage underscores “India’s geographic connection to the Asia-Pacific as a cornerstone of the Trump administration’s strategic thinking,” Alyssa Ayres, senior South Asia fellow at the Council on Foreign Relations, said in a note this week.

The “free and open” part of Trump’s statement also adds an ideological aspect to regional security and was widely seen as a reference to Beijing’s behavior in the South China Sea. New Delhi, which isn’t one of America’s treaty allies but nonetheless enjoys a robust bilateral relationship based on shared democratic values, has a significant role to play in that.

“Like it or not, or hide it or not, the term Indo-Pacific now seems to be a means of including India in the military calculations of U.S. strategy in the Pacific,” Manoj Joshi, distinguished fellow at think tank Observer Research Foundation, said in a recent note.

New Delhi is also a major player in a newly-resurrected informal defense alliance aimed at offsetting Chinese maritime aggression. Consisting of the U.S., Australia, Japan and India, the partnership was first launched in 2007 in what many saw as a maneuver to contain rising Chinese power. The coalition, known as the “Quad,” eventually fell apart — but under Tokyo’s initiative, resumed at the recent ASEAN Summit in Manila.

The Quad’s revival in itself isn’t a major development, but combined with the White House’s newly asserted focus on a free and open Indo-Pacific, Washington is “pointedly wooing New Delhi into what could well be a military alliance,” Joshi said.

The world’s second-largest economy has expressed reservations about the Quad, with a Chinese foreign ministry spokesman saying Monday that regional cooperation should neither be “politicized” nor “exclusionary.”

Supporting India

If Washington is going to rely on India as a strategic partner, it should help Modi’s administration strengthen its position in Asia, said Ayres, a former deputy assistant secretary for South Asia at the U.S. State Department.

The U.S. should expend diplomatic capital to make Indian membership into the influential Asia-Pacific Economic Cooperation a reality, a move that could offset Chinese influence and “help the larger Indo-Pacific region balance its economic center of gravity better,” she explained.

India, Asia’s third-largest economy, remains excluded from the economic bloc despite a membership request dating back more than 20 years.

APEC membership would also help New Delhi gain a greater role in institutions of global governance and send a strong message about increasing free and open trade, Ayres continued.

Trump could also do more to help Modi’s administration with other geopolitical concerns.

“For all its talk of the Indo-Pacific, [Washington] refuses to associate with India on issues relating to the Arabian Sea and the Persian Gulf, two of the most important external areas for India,” said Joshi. “There is no reciprocal U.S. commitment to issues of Indian concern relating to Pakistan and the dangers arising out of the highly volatile environment in the Persian Gulf area, which the U.S. has helped create.”

Modi’s administration is concerned about terrorist attacks on Indian soil from Pakistan-based militants as well as overall stability in Iran, a major oil supplier to New Delhi.

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

Nikkei falls 0.7% as rest of Asia wavers; sterling slides

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

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Asian shares wavered in early Monday trade after US stocks closed mostly lower on Friday.

Markets on the move

The Nikkei 225 fell 0.72 percent, with trading houses, financials and retailers mostly lower. Energy-related stocks, however, were mixed against the broadly declining index: Fuji Oil Holding rose 1.15 percent while Inpex slid 1.52 percent.

Across the Korean Strait, the Kospi edged down 0.39 percent as gains in automakers and cosmetics stocks were offset by losses in manufacturing names: Amorepacific rose 2.03 percent, Hyundai Motor jumped 3.24 percent and Samsung Heavy fell 2.38 percent.

Down Under, the S&P/ASX 200 slipped 0.22 percent. Moderate losses in the heavily-weighted financials sub-index, which fell 0.73 percent, weighed on the broader index.

Greater China markets were mostly higher. The Hang Seng Index rose 0.41 percent in early trade. On the mainland, the Shanghai Composite rose 0.24 percent while the Shenzhen Composite was off 0.18 percent.

Asian corporates on the earnings calendar on Monday include Mizuho Financial Group and Rakuten. Chinese e-commerce company JD.com, which is listed on the Nasdaq, will report during U.S. hours.

US stocks mostly closed lower on Friday, extending losses made on Thursday. The Dow Jones industrial average slid 0.17 percent, or 39.73 points, to end at 23,422.21.

The lead up

Eleven countries have agreed on “core elements” in a regional trade pact from which the US pulled out earlier this year. Japan has led talks for the trade deal, called the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), since the US withdrew. Reuters reported the agreement had not yet been finalized.

Elsewhere, Saudi Arabia has called for an urgent Arab League minsterial meeting to discuss Iran’s role in the region. The meeting, which comes on the back of elevated tensions, is expected to be held in Cairo, Reuters said.

Corporate news

E-commerce giant Alibaba said it brought in a record USD 25 billion in sales on Singles’ Day this year, above last year’s haul of USD 17.8 billion. The online shopping event, which initially began as an anti-Valentines’ Day celebration of sorts, takes place annually on November 11.

Meanwhile, ride-hailing platform Uber is on the verge of reaching an agreement to sell a stake of the company to Japan’s SoftBank, the New York Times reported. The deal would see a group of SoftBank-led investors take a stake of at least 14 percent in Uber, the Times added. Shares of SoftBank were down 1.11 percent.

Razer, a gaming hardware company, was in focus as it made its debut on the Hong Kong Exchange. The company’s shares rose more than 30 percent above its issue price of HK$3.88 at the open. Razer’s listing follows China Literature’s Hong Kong debut last week, which saw the Tencent-backed online literature platform’s stock rise some 90 percent on its first day of trade.

Watching the dollar

The British pound fell to trade at USD 1.3118 at 9:20 a.m. HK/SIN compared to levels around the USD 1.318 handle seen at the end of last week. Markets digested headlines that 40 Conservative members of Parliament intended to sign a letter of no-confidence in British Prime Minister May as Brexit talks dragged on.

The Australian dollar edged down to trade at $0.7644 at 8:16 a.m. HK/SIN compared to Friday’s close of USD 0.7661. The currency had been pressured following the release of the Reserve Bank of Australia’s quarterly statement last week.

“[U]nless there is massive surprise in the data or an abrupt shift in RBA rhetoric, who appear sidelined indefinitely on tepid growth and apathetic inflation figures, the Aussie should remain pressured,” Stephen Innes, Asia Pacific head of trading at OANDA, said in a note.

The currency’s slide on Monday also came after news of yet another member of Parliament resigning on Saturday due to citizenship issues. The Australian constitution blocks dual nationals from Parliament.

The dollar index, which tracks the US dollar against a basket of six currencies, stood at 94.559 at 8:17 a.m. HK/SIN, above Friday’s close of 94.392 but below levels around the 94.7 handle early last week.

The commodities trade

Oil prices were firmer after slipping on Friday. US West Texas Intermediate crude inched higher by 0.23 percent to trade at USD 56.87 a barrel and Brent crude futures rose 0.16 percent to USD 63.62.

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

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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

Mark Zuckerberg says technology doesn’t create more jobs, but increases pay

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

Listen to the Article (6 Minutes)

Mark Zuckerberg says technology doesn’t necessarily create more jobs but does improve the pay of workers who get re-trained to take advantage of innovation in their industries.

Zuckerberg made the comments in a post after visiting an Oklahoma wind farm, part of what he says will be the last leg of his 2017 tour of the U.S.

“I’m in Oklahoma on the last trip of my Year of Travel challenge,” Zuckerberg wrote in the post, referring to his plan to visit all the states he hadn’t previously.

“I’ve got a few more stops and then Friday morning I’m doing a live discussion in Kansas about what I’ve learned this year,” the Facebook CEO wrote.

Zuckerberg, one of the world’s five wealthiest people, then turned his attention to the impact of technology on the nation’s workers.

“A lot of people focus on whether technology creates or destroys jobs. I’ve seen both this year –improving tech has created more jobs in some industries and in others it has eliminated jobs. But perhaps the more common dynamic I’ve seen is that the number of jobs stays about the same, but in order to operate the increasingly advanced technology, people need more training and therefore get more pay.”

Studies from several universities have suggested that technology will eliminate jobs in many professions in coming decades.

Zuckerberg also gave a plug to the renewable energy industry in a state usually associated with oil and gas production.

“I visited a wind farm outside Duncan. Oklahoma is oil country, and they’re still the third highest producer of natural gas of any state. But as technology improves and costs get lower, renewable energy is catching up. Oklahoma is on track to become the nation’s second biggest producer of wind energy behind Texas,” he wrote.

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

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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

Broadcom makes an unsolicited bid for Qualcomm in largest tech deal in history

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

Listen to the Article (6 Minutes)

Broadcom on Monday made an unsolicited offer to buy Qualcomm, in a bold bid to become a dominant supplier of communications chips to the wireless industry.

Broadcom Limited offered to buy smartphone chip supplier Qualcomm Incorporated for USD 70 per share or USD 103 billion in cash and stock, in what would be the biggest technology acquisition ever.

A tie-up would combine two of the largest makers of wireless communications chips for mobile phones and raise the stakes for Intel Corp, which has been diversifying into smartphone technology from its stronghold in computers.

Broadcom’s offer is at a premium of 27.6 percent to Qualcomm’s closing price of USD 54.84 on Thursday, a day before media reports of a potential deal pushed up the company’s shares.

Qualcomm shareholders would get USD 60 in cash and USD 10 per share in Broadcom shares. Including debt, Broadcom’s bid values the transaction at USD 130 billion.

Qualcomm shares were halted for trading in premarket trade.

Qualcomm’s stock, traded on the Nasdaq, surged by more than 12 percent on Friday amid speculation that Broadcom was preparing a bid. It finished the session at USD 61.81.

Broadcom has been working on its proposal for months and is believed to have approached Qualcomm privately about its offer, but was quickly rebuffed. The company had originally considered an attempt to buy Qualcomm prior to that company’s deal to buy NXP more than one year ago, but upon getting no traction at that time, retreated.

This time, Broadcom is determined to bring its offer to the attention of Qualcomm shareholders. People familiar with the company’s thinking indicate Broadcom will not shy away from initiating a proxy fight to gain seats on Qualcomm’s board of directors in support of its offer.

Qualcomm’s annual meeting is currently scheduled for March of next year with the deadline for nominating directors sometime in December.

Qualcomm, however, is expected to strongly resist Broadcom’s proposal. People close to the company expect it to indicate the offer price is far below what it would expect in a takeover. In addition, Qualcomm is expected to raise concerns that any combination with Broadcom would raise significant antitrust concerns.

While Broadcom is expected to indicate its willingness to let Qualcomm complete its deal to acquire NXP, it is also expected to encourage the company not to raise its current USD 110 cash deal to acquire the company. Qualcomm is under pressure from NXP shareholders to raise its bid for that chip company, or face the likely prospect it will not be able to meet the minimum threshold needed to take control of the company under Dutch law.

Officials at Qualcomm and Broadcom declined to comment.

(With inputs from Reutrers)

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

Wilbur Ross says reports he didn’t disclose ties to Putin-linked firm are ‘totally wrong’

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

Listen to the Article (6 Minutes)

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