Month: December 2023

South Korea’s exports pick up momentum as Chips bounce back

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

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The recovery in South Korea’s exports accelerated in November on the back of a rebound in semiconductor demand, boosting optimism for the country’s economic outlook and global trade next year.

Exports rose 7.8% from a year earlier, compared with economists’ forecasts for a 5% rise. Overall imports dropped 11.6%, resulting in a trade surplus of $3.8 billion, according to data released Friday by the trade ministry. Semiconductor shipments rose 12.9% in the first growth in 16 months.

South Korea’s trade numbers serve as a key leading indicator for global trade activity as the nation ships a variety of products including machines, displays and refined oil that are embedded across worldwide supply chains.

The country’s economic outlook for 2024 also hinges on the strength of exports growth. The Bank of Korea trimmed its outlook for 2024 growth to 2.1% on Thursday.

Challenges overhanging the outlook for Korea’s exports include global central banks continuing their fight against inflation with restrictive monetary policies and slackening demand in China, the world’s second-biggest economy. The Organisation for Economic Co-operation and Development said Wednesday it expects China’s economic growth to slow to 4.7% next year and 4.2% in 2025.

Another risk factor is the Israel-Hamas conflict, which threatens to fuel oil prices and inflation that would dent consumer sentiment.

“Stronger-than-expected global growth and easing geopolitical tensions would improve the economic outlook for the export-dependent Korean economy,” the OECD said in its latest outlook.

The OECD sees the Korean economy expanding 2.3% next year, faster than the pace predicted by the BOK. The BOK has held its key interest rate steady for almost a year as it seeks to tame inflation while also preserving economic momentum.

Korea’s exports are getting a boost from a rebound in some chip prices while growth in demand for other products is led by autos, machinery and wireless communications products. Worldwide smartphone shipments are likely to grow 3.8% next year after contracting 3.5% this year, according to a release by the International Data Corporation.

Still, there’s reason for caution. Economists see slower global economic growth next year, undermining demand for export products from countries like South Korea. The US in particular may see consumption slow as the benefits from fiscal investment programs dissipate, according to a forecast by the Bank of America.

The Federal Reserve’s latest Beige Book indicated a slump in discretionary spending may already be underway.

“A further slowdown in global demand is likely to keep a lid on exports over the coming quarters,” economists at BMI, a unit of Fitch Solutions, said. “Beyond that however, we think monetary loosening will pave the way for a pick-up in global trade, and South Korea’s export-oriented economy will benefit as a whole.”

Exports to China edged down 0.2% from the previous year, continuing their improving trend. Shipments to the US have also grown for a fourth month, according to trade ministry data.

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

S&P 500 reports one of its best November gains in a century

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

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Wall Street saw a late-day rebound, with stocks notching one of their biggest November rallies on record, fueled by speculation the Federal Reserve will put an end to its aggressive hiking campaign.

After this month’s $3 trillion surge, the S&P 500 is now just 5% away from its all-time high. The US equity benchmark climbed over 8% in November — a feat achieved fewer than 10 times during that same month since 1928, according to data compiled by Bloomberg.

It was also the gauge’s biggest monthly gain since July 2022. Treasuries lost steam after a historic rally. The dollar closed higher, but posted its worst month in a year.

US consumer spending, inflation and the labor market all cooled in recent weeks — adding to evidence that growth is gradually slowing. The core personal consumption expenditures price index, the Fed’s preferred gauge of underlying inflation, met economists’ estimates.

“This is likely to cement expectations that the monetary policy inflection point is close, and the Fed will make at least one rate cut in the first six months of 2024,” said Sonu Varghese, global macro strategist at Carson Group. “Fed officials have already acknowledged that inflation is easing, and that can happen in the face of a strong economy and low unemployment, essentially laying the groundwork for rate cuts.”

In a favorable sign for equity optimists, a Bloomberg Intelligence model known as the Economic Regime Index shows that the worst of America’s macro pains appear to have passed.

The index dropped back into recession territory last month after showing nearly a full rebound earlier this year from its trough in late 2022. While the model still signals potential economic weakness ahead, as long as it stays above its lows the outlook is favorable for the S&P 500, says Gina Martin Adams, chief equity strategist at BI.

Traders also continued to keep a close eye on the latest remarks from US officials. Fed Bank of New York President John Williams reiterated the benchmark lending rate is at or near its peak and said policy is “quite restrictive.” His San Francisco counterpart Mary Daly said rates are in a “very good place” to control inflation, though she’s not thinking about cuts and that it was too soon to say if hikes are finished.

“It is still too early to eliminate the tightening bias in the Fed’s forward guidance,” said Brian Rose, senior US economist at UBS Global Wealth Management. “Fed Chair Jerome Powell will make a public appearance on Friday, and we expect him to be careful to avoid sounding too dovish.”

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

OPEC+ production cuts fail to convince oil traders due to lack of detail

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

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OPEC+ agreed to a surprise new oil supply cutback of about 9 lakh barrels a day, yet crude prices fell as traders remained skeptical on whether it will be fully implemented.

Members including Russia, the United Arab Emirates, Kuwait and Iraq pledged the extra reductions after an online meeting, the organization said in a statement on its website. Saudi Arabia promised to continue its unilateral one million barrels-a-day cut through the first quarter.

Still, traders were wary of how far countries will follow through on the curbs, which are on a “voluntary” basis. At the end of fractious talks, Angola said it would reject its diminished output quota and keep pumping at current levels.

West Texas Intermediate futures erased initial gains to slide 1.5% to $76.67 per barrel in New York.

“Crude is cratering because so far traders have yet to see concrete evidence of credible incremental output cuts alongside the continuation of voluntary Saudi and Russian cuts,” said Bob McNally, president of Rapidan Energy Group. The market is “surprised and confused,” he said.

Oil has weakened over the past two months amid plentiful supplies and a darkening economic backdrop. The outlook could deteriorate even further next year, when forecasters including the International Energy Agency anticipate a sharp slowdown in demand growth.

Since July, Saudi Arabia has been making an extra voluntary cut of 1 million barrels a day, described by Energy Minister Prince Abdulaziz bin Salman as a “lollipop” for the market. The kingdom was pressing the rest of the Organization of Petroleum Exporting Countries and its allies to join this effort after crude prices fell by more than 10% from their September high.

“It seems the OPEC+ production cuts are ‘voluntary’ cuts, not part of an OPEC+ agreement,” said Giovanni Staunovo, an analyst at UBS Group AG. “Hence the concern is that a large fraction of it could be a pledge on paper and effectively less barrels being removed from the market.”

OPEC+ was compelled to delay Thursday’s meeting, originally scheduled for November 26 in Vienna, by four days because of a dispute over quotas for some African members.

The group ultimately downgraded Angola’s quota by roughly 200,000 barrels a day to 1.1 million a day, but Luanda’s liaison to the organization rejected the limit.

“We will produce above the quota determined by OPEC,” Angola’s OPEC governor Estevao Pedro said in an interview. “It is not a matter of disobeying OPEC; we presented our position, and OPEC should take it into consideration.”

The defiance will bring back troubling memories of Ecuador’s exit from the group. The South American producer said it would breach its quota in 2017, and eventually ended up leaving.

In a surprise move, Brazil will join the cooperation charter of the OPEC+ oil alliance, a move that won’t bind it to making production cuts. Brazilian Energy Minister Alexandre Silveira told a meeting of the group on Thursday that the country would make the move next year.

“President Lula confirmed our entry into the OPEC+ cooperation charter from January 2024,” the minister told the group, according to a video circulated by delegates. He was met with a round of applause.

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

TCS share buyback to open on Friday; Should the retail investor participate?

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

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Tata Consultancy Services (TCS), India’s largest technology services company by market capitalisation will be conducting its fifth share buyback starting Friday, December 1.

The ₹17,000 crore buyback will close on December 7. Though a tender offer route, the company intends to buyback nearly 4.2 crore shares or 1.1% of the outstanding equity at ₹4,150 per share. The buyback price is a premium of 18% when compared to Wednesday’s closing price for TCS.

A tender offer buyback means the company will be repurchasing all their shares at the pre-determined price, which in this case is ₹4,150.

But What Does It Mean For The Small Shareholder?

Small shareholders or the retail shareholders, those categorised as one with investments less than ₹2 lakh, have been assigned an entitlement ratio of 1 equity share for every six shares held as of the record date of November 25.

This means that if all retail shares participate, the entitlement ratio comes up to 17% or acceptance of 17 shares for every 100 tendered at a price of ₹4,150.

However, the acceptance ratio will rise if all small shareholders do not tender their shares in the buyback.

For other qualifying or general shareholders, the entitlement ratio has been set at two shares for every 209 held.

Should The Retail Shareholder Participate?

Lets remember that a retail shareholder is one who has close to 57 shares of TCS, as their total investment cannot exceed ₹2 lakh. Lets now explain this with the help of an example.

Suppose you had purchased 100 shares of TCS at ₹3,450, which was the price as on the ex-buyback date. Of these, 17 get accepted at a price of ₹4,150 apiece. In that case, the breakeven price for the balance shares is around ₹3,300, which is nearly 4-5% lower than the current market price. This means that if the TCS share price holds above the mark of ₹3,300 after closure of the buyback, retail shareholders have made money.

On looking at the historical share price performance post the closure of the buyback, you would see that the stock typically falls in the one month post the buyback closing. This nullifies the benefit in tendering shares at a higher price.

Barring 2020, when the IT stocks were in a bull run due to the post-Covid digitisation boom, TCS shares have declined in one month post the buyback in three out of the last four buybacks. This means that there is no big benefit or loss in participating in the buyback for the retail shareholders.

Unless of course, there is an increase in the acceptance ratio, which may result in some benefit to the shareholders.

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

Trade Setup for December 1: Nifty 50 aims for newer records as final month of 2023 dawns

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

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The final month of 2023 is here and the Nifty has recovered most of the losses since peaking out mid-September. The previous high of 20,222 is just 90 points away and the index will hope to surpass that during the first day of the new series itself.

However, historical data suggests that December does not necessarily bring the “santa-claus” rally it is generally known for. Last year, the Nifty fell 3.5% in December and with the exception of 2020, which was a Covid-19 year, the index has not done much in the final month of the year.

Although there was positive newsflow post market closing on Thursday, with the country’s September quarter GDP numbers surpassing expectations and the state exit polls also projecting a closer-than-expected finish on Sunday.

Foreign investors were net buyers in the cash market on Thursday but the number is skewed due to the billion-dollar-plus MSCI inflows seen during the final minutes of the trading session. Domestic institutions were net sellers during the monthly expiry session.

Nagaraj Shetti of HDFC Securities is expecting newer highs on the Nifty in the near-term. However, he sees newer direction for the market post the election results on Sunday. Immediate support on the downside is placed at 19,900 – 19,950 levels.

The positive sentiment on the index is likely to continue as long as it sustains above the 20,000 mark, said Shrikant Chouhan of Kotak Securities. Above those levels, the index can move towards 20,200 – 20,250 levels, while a slip below 20,000 can take the index back down to 19,900.

Rupak De of LKP Securities also said that the sentiment will weaken only if the Nifty drops below 20,000 and until then, a buy-on-dips strategy is likely to continue. On the upside, 20,200 – 20,230 is a resistance zone, above which, the index could move towards 20,450 – 20,500.

The Nifty Bank underperformed the Nifty on Thursday but the outperformance of the previous four sessions ensured that the index ended November with gains of nearly 4%. The month turned out to be the best since April for the banking index. Sustaining at higher levels will be key for the Nifty Bank if the Nifty has to scale newer peaks.

Ashwin Ramani of SAMCO Securities believes that 44,500 is the key level for the Nifty Bank as the highest Call Open Interest is placed at that strike. On the downside, support for the index is seen at 43,950.

What Are The F&O Cues Indicating?

Nifty 50’s futures added 5% in Open Interest on Thursday and ended the November series with rollovers of 73%. The Nifty Bank though had the greater rollovers at 80%, with its futures also adding 3% in Open Interest. Nifty 50’s Put-Call Ratio is now at 1.26 from 1.47.

At the start of the new series, no stock is in the F&O ban list.

Nifty 50 on the Call side for December 7 expiry:

For next Thursday’s weekly options expiry, the Nifty 50 Call strikes between 20,200 and 20,400 have seen Open Interest addition.

Nifty 50 on the Put side for December 7 expiry:

On the put side, the Nifty 50 strikes between 19,900 and 20,100 saw Open Interest addition for next Thursday’s expiry.

These stocks added fresh long positions on Thursday, meaning an increase in both Price and Open Interest:

These stocks added fresh short positions on Thursday, meaning a decrease in price but increase in Open Interest:

Here are the stocks to watch out for ahead of Friday’s trading session:

• UltraTech: CNBC-TV18 newsbreak confirmed as company announces acquisition of Kesoram’s cement unit. Kesoram will demerge its cement business into UltraTech, who will issue one share for every 52 of Kesoram. Deal values Kesoram at ₹173 per share, a premium to Thursday’s closing price of ₹139. Deal at an enterprise valuation of ₹7,500 crore.
• Defence Stocks: Defence Acquisition Council approves acquisitions worth ₹2.23 lakh crore to enhance the capabilities of the armed forces. 98% of those will be sourced from domestic industries. Procurement of light combat helicopters and light combat aircraft Mk 1A from HAL gets approval.
• Whirlpool of India: Parent Whirlpool Corporation to sell up to 24% of its ownership interest in the India unit in 2024. Whirlpool Corporation currently has 75% stake in the India unit. Parent intends to retain a majority interest post completion of transaction. Expects to use proceeds to reduce debt levels. The company does not see impact to previously announced guidance post this announcement.
• ITD Cementation: Gets new orders worth ₹1,001 crore in Andhra Pradesh.
• CSB Bank: RBI approves dilution of shareholding of promoter FIH Mauritius Investments Ltd. in the bank’s paid-up capital. The dilution of shareholding is in line with the extant of RBI’s master direction. FIHM to reduce shareholding to 26% within 15 years of completion of investments.
• Thomas Cook: Fairbridge Capital (Mauritius) to excerise greenshoe option in the OFS, which opens for retail investors on Friday.
• Biocon: Announces completion of integration of the Viatris Biosimilars business in 31 European countries.
• MOIL: Cuts prices of Manganese ore and other products, some by 5% since November 1.
• SIS: Board approves buyback of 1.12% equity worth ₹90 crore. The buyback price has been fixed at ₹550 and the process will be carried out via the tender offer route.

What Are Global Cues Indicating?

Asian equities have opened lower ahead of private factory activity surveys from across the region. PMI readings are due from Japan, South Korea, India and China on Friday.

The Nikkei 225 is just below the flat line, while the Topix has opened 0.2% higher.

However, South Korea’s Kospi is down 1%, as is the Kosdaq. Hang Seng’s futures are pointing to a flat start to the day.

The Dow Jones reached new highs for the year overnight. It also had its best month since October 2022. The S&P 500 gained 0.4%, while the Nasdaq gained 0.2%.

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

Mission Net Zero Summit set to be held in New Delhi on Dec 7-8

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

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The first Mission Net Zero India Summit is slated to be held in New Delhi on December 7 and 8, supported by the Ministry of Road Transport and Highways, the Ministry of Heavy Industries, the Department of Transport and Government of the NCT of Delhi, Niti Ayog and the Kerala government.

The event will be majorly focused on India’s goal of achieving energy transition and decarbonisation goals with affordability, sustainability, and energy independence. 

The event will include three key conference tracks: Empowering India’s Energy Sector to Achieve Net Zero, AtoZero: Accelerating India’s Leadership in Renewables and Next Mobility: Pathway to Decarbonising the Transport Sector.

In these three conference tracks, the Public Sector Undertakings (PSUs), various ministries and private sector companies will have discussions on India’s strategy for long-term low-carbon growth that will include accelerating the adoption of renewables, electrification in manufacturing, cleaner mobility solutions, and energy efficiency, among others.

The Mission Net Zero India Summit will be jointly organised by Constellar and Messe Frankfurt India and will include the following government officials as speakers: Dr. Hanif Qureshi, IPS, Joint Secretary, Ministry of Heavy Industries, Government of India, Sanjay Dubey, IAS, Principal Secretary, Energy Department, Government of Madhya Pradesh and Ashish Kundra, IAS, Principal Secretary and Commissioner (Transport), Government of NCT of Delhi amongst other speakers.

Various leading organisations and associations in the sector along with several corporates are expected to be in the attendance at the event in the national capital.

Paul Lee, Chief Executive (Markets), Constellar said, “Recognising that major nations play a pivotal role in moving the dial towards sustainability, the Summit becomes a powerful platform to leverage their influence, collective expertise, cutting-edge technology, and innovative solutions. Together, these global leaders will forge sustainable roadmaps for a clean energy future, catalysing action and shaping a more sustainable and resilient tomorrow.”

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

Expect upside to FY24 GDP growth forecast, tax buoyancy shows India may be understating growth: CEA

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

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Chief Economic Advisor V Anantha Nageswaran said he expects an upside to the 6.5% GDP growth forecast for this fiscal and expects growth momentum to continue in the third quarter as well.

India’s GDP growth for the second quarter came in at 7.6%, which was above both, the RBI’s forecast of 6.5% and a CNBC-TV18 poll of 7.03%. In the first quarter, India’s GDP growth was at 7.8%, and 6.2% in the year-ago period.

The CEA also added that high tax buoyancy showed India may be understating its economic growth. “When you have a tax buoyancy which is as high as 1.9 or close to 2, which is historically unprecedented, then it is quite possible that we are not measuring the underlying momentum of the economy. We will keep the GDP growth estimate for the full fiscal at 6.5%, but we are more comfortable (with the projection) than before,” he said.

The nominal GDP for the September quarter came in at 9.1%, above expectations of 8%. For the same time last year it was at 17.2% and at 8% in the previous quarter.

Nageswaran added that the impact of the second quarter’s numbers on the entire fiscal is yet to be worked out. “The momentum of economic growth will continue in the third quarter as well,” he said.

On another note, analysts across the Street too raised their GDP estimates after the September quarter print surpassed expectations.

In his address at the third edition of India Debt Capital Market Summit 2023, Union Minister Piyush Goyal spoke about how India was earlier categorised as a fragile 5 economy, and how the Narendra Modi government worked towards changing this.

#WATCH | Union Minister Piyush Goyal addressed the 3rd edition of India Debt Capital Market Summit 2023

He says, ” All are aware that India was categorized as a fragile 5 economy. If you remember the headlines of that period, say, 3 or 4 years before 2014. Almost every month, we… pic.twitter.com/7YBv6Xpct5

— ANI (@ANI) December 1, 2023

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