Tag: trade war

China’s industrial profits post steepest fall in 8 months

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

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Profits at China’s industrial firms declined in annual terms for the third consecutive month in October, tracking sustained drops in producer prices and exports and underscoring slowing momentum in the world’s second-largest economy.

Industrial profit fell 9.9 percent in October year-on-year to 427.56 billion yuan ($60.74 billion), data released by the National Bureau of Statistics showed on Wednesday, marking the biggest drop since January-February period and compared with a 5.3 percent decline in September.

China’s industrial sector has been under pressure in recent months as slowing demand at home and the fallout from the Sino-U.S. trade dispute undercut earnings.

Despite recent signs of progress in trade negotiations, there is growing uncertainty about whether Beijing and Washington can reach an agreement that would put off another US tariff hike on Chinese goods scheduled to take effect on December 15.

US President Donald Trump said on Tuesday that Washington and Beijing are close to agreement on the first phase of an agreement.

China’s producer price index, seen as key indicator of corporate profitability, fell by the sharpest rate in more than three years in October as prices for raw materials dropped. The country’s official manufacturing PM also showed a contraction in activity for the sixth straight month in September as new export orders declining for the 17th month in a row.

China’s exports fell in annual terms for the third straight in October, albeit at a slower-than-expected rate.

For January-October, industrial firms’ profits fell 2.9 percent from a year earlier to 5.02 trillion yuan, compared with a 2.1 percent decline in January September.

China’s central bank warned on Monday of increasing downside risks for the economy as growth continues to falter despite various fiscal and monetary stimulus introduced this year.

A Reuters poll of analysts tipped China’s growth to slip to a near 30-year low of 6.2 percent this year and then ease further to 5.9 percent in 2020, underlining the challenges faced by Beijing.

Industrial firms’ liabilities increased 4.9 percent from a year earlier to 66.74 trillion yuan at end-October, compared with a 5.4 percent increase at end-September.

Private sector profits rose 5.3 percent in January-October, slowing from 5.4 percent for January-September.

The data covers firms with more than 20 million yuan in annual revenue from their main operations.

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

India, US in talks to resolve trade issues, says official

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

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India and the United States are in talks to resolve trade issues and both New Delhi and Washington hope to find an early solution, an Indian foreign ministry spokesman said on Thursday.

“Discussions have been going on between the two sides,” Raveesh Kumar, a spokesman for India’s foreign ministry, said in a news conference.”We remain optimistic that a solution will be found very soon,” Kumar said.

The two countries have been locked in trade disputes for months, slapping higher tariffs on each other’s products and the US withdrawing a key concession to India.

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

Asia shares await on US-China trade progress, Fed events

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

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Asian share markets got the week off to a muted start on Monday as jaded investors awaited real evidence on progress in the U.S.-China trade dispute, though sentiment found support from another record close on Wall Street.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.06 percent in very light volumes.

Japan’s Nikkei added 0.05 percent but remained short of its recent 13-month top. E-Mini futures for the S&P 500 eased 0.1 percent, though that was from historic highs.

Doubts about Sino-U.S. trade talks emerged early last week, although optimism gradually returned as U.S. officials sounded more positive.

On Saturday, Chinese state media said the two sides had “constructive talks” on trade in a high-level phone call that included Vice Premier Liu He, U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

“Markets remain at risk of further short-term volatility given issues around trade, Iran & the Middle East, impeachment noise and weak global economic data,” said Shane Oliver head of investment strategy and chief economist at AMP Capital.

“But valuations are okay – particularly against low bond yields – global growth indicators are expected to improve through next year and monetary and fiscal policy are becoming more supportive.”

Wall Street’s main indexes closed at record levels on Friday as the S&P 500 scored its sixth straight week of gains. The Dow ended Friday up 0.8 percent, while the S&P 500. SPX made 0.77 percent and the Nasdaq 0.73 percent.

WAITING ON THE FED
In currency markets, the dollar was little changed against its main peers on Monday and well within recent tight trading ranges. Indeed, volatility in the market has been the lowest in decades recently and shows no sign of shifting.

The dollar was steady on the yen at 108.72, after bouncing on Friday. Chart support lies at 108.23 with stiff resistance at 109.48.

The euro, likewise, idled at $1.1054 EUR having found support at $1.0987 last week. Investors are awaiting the first major speech by European Central Bank President Christine Lagarde due on Friday for clues on future policy.

Sterling nudged up to $1.2916 GBP as more polls showed the Tories well ahead in the election race.

Against a basket of currencies, the dollar was a shade softer at 97.954.

The dollar and bonds are likely to be sensitive to minutes of the Federal Reserve’s last policy meeting, set to be released on Wednesday.

“The minutes are likely to reiterate that the U.S. economy is ‘solid’ and that current monetary policy settings are ‘appropriate’, which would support the dollar,” said Joseph Capurso, a currency analyst at Commonwealth Bank of Australia.

However, he noted the soft report on October U.S. retail sales released on Friday suggested previously strong consumption was showing some cracks.

“Any further weakness in consumption could warrant a material reassessment of the outlook by the FOMC. Under our baseline, the FOMC would most likely start cutting interest rates again in 2020,” said Capurso.

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

10 key factors that will keep traders busy this week

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

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Muted September quarter numbers of Indian corporates, weak economic data on inflation and IIP kept the Indian market volatile throughout the week gone by.

Worrisome macroeconomic prints coincided with change in the growth outlook by Moody’s last week where it was downgraded to negative from stable for India, weighing on investor sentiment.

The S&P BSE Sensex rose 0.08 percent while the Nifty fell 0.11 percent for the week ended November 15.

In the coming week, US-China trade deal, macro data and policy measures by the government, if any, to help stressed sectors such as telecom, will be a major trigger for the market.

“While medium-term volatility is in the offing, we remain cautiously optimistic that markets will scale new highs. In the near-term, we believe the trade deal will be the major driver for the market,” said global financial firm Standard Chartered.

Some analysts think that the market may see some consolidation in the coming days.

“We reiterate our consolidation view on Nifty and suggest focusing more on stock selection and position management,” said Ajit Mishra, Vice President – Research, Religare Broking.

Nifty remained volatile throughout the week in a wider trading range of 11,800-12,000 and faced stiff resistance at 12,000 -mark which has been acting as a crucial resistance level.

“The short-term trend for Nifty continues to be rangebound with a slight negative bias. We expect a soft start on Monday with some rangebound trade. As long as Nifty trades below 12,050 levels, we expect some consolidation in the range of 11,800-12,000 zone,” said Nilesh Jain, derivatives and technical analyst at Anand Rathi.

Here are 10 key factors that will keep traders busy this week:

US-China trade deal

An amicable deal between the world’s two largest economies will be a major trigger for the markets across the globe. Wall Street’s main stock indexes closed at record levels on Friday, fueled by fresh hopes of a US-China trade deal.

Media reports have indicated that the United States and China are getting close to a trade agreement. However, some differences are yet to be ironed out.

The world’s largest economies have been involved in a tit-for-tat trade war that is dragging on global growth.

China’s reluctance to commit to a specific amount of farm purchases remains a sticking point in the talks, as is the US reluctance to roll back tariffs reported Reuters.

However, Commerce Secretary Wilbur Ross said there was a “very high probability” that the United States would reach a final agreement on a phase one trade deal with China, the Reuters report added.

F&O cues

Maximum call open interest (OI) of 22.14 lakh contracts was seen at the 12,000 strike price. It will act as a crucial resistance level in November series.

This is followed by 12,200 strike price, which holds 15.76 lakh contracts in open interest, and 11,800, which has accumulated 13.90 lakh contracts in open interest.

On the other hand, Maximum put open interest of 21.92 lakh contracts was seen at 11,600 strike price, which will act as crucial support in November series.

This is followed by 11,500 strike price, which holds 20.86 lakh contracts in open interest, and 11,800 strike price, which has accumulated 19.45 lakh contracts in open interest.

“OI Data is pointing a broad range of 12,200–11,700. We are seeing some good concentration of calls at 12,100 level and puts at 11,800 level. Long positions are created in calls at 12,000 and 12,100 strikes,” said Mustafa Nadeem, CEO, Epic Research.

FII flow

November so far has witnessed a cumulative inflow by the foreign institutional investors (FIIs) in equities and debt to the tune of Rs 19,251 crore, data from NSDL showed.

The Indian market has been witnessing sustained capital inflow since the month of September after the hopes of the US-China trade deal started getting stronger.

A sustained inflow of foreign funds will infuse positivity into the market which may take the equity benchmarks near their fresh all-time highs.

FOMC minutes

Federal Open Market Committee (FOMC) minutes of the Fed’s October policy meeting will be announced on November 21.

The minutes of policy meet will show what transpired in the Federal Reserve’s October meet that resulted in the slashing of the target range for the federal funds rate to 1.5-1.75 percent, the third rate cut so far this year.

Moreover, the market will observe the tone of the Fed to get a clue about the rate trajectory of the near-term future.

Policy measures

The winter session of the Parliament will begin from November 18 and will continue till December 13. All eyes will be on whether the government announces any fresh stimulus to stem the economy.

Finance Minister Nirmala Sitharaman on November 15 said: “We want no company to shut their operations. We want everyone to flourish.”

Two major telecom companies — Vodafone Idia and Airtel — have posted a combined quarterly loss of about Rs 74,000 crore as they were hit by statutory dues after a recent Supreme Court ruling.

The minister further said the Committee of Secretaries (CoS), appointed to deal with financial problems being faced by telecom companies, “has not taken a final decision yet”.

Despite a raft of measures, taken by the government, the signs of stress in the economy are strongly visible. Data showed that consumer spending fell to decades low. Poor macroeconomic indicators have risen hopes of fresh government measures.

Technical view

Nifty remained volatile throughout the week gone by in a wider trading range from 11,800-12,000 levels and faced stiff resistance at 12,000-mark which has been acting as a crucial resistance.

On the weekly scale, Nifty has formed Doji candle for continuous two weeks, indicating that bulls and bears both are making attempts to drag the index on either side.

Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said, in the next session if Nifty slips below 11,891 then initially it should head towards 11,802-mark and a breach of this shall further accelerate selling pressure with ideal targets placed around 11,700.

Global cues

Global cues will remain an important trigger for the Indian market. During this week, the market will read European Central Bank’s financial stability review, retail sales data of the US for October and Japan’s balance of trade data for October, among others.

Corporate action

Here are corporate actions which will take place in the coming week:

Crude oil prices

Global crude oil prices rose nearly 2 percent, buoyed by optimism over a US-China trade deal. Oil prices have been subdued of late due to concerns that the weakness in the global economy will curtail the demand for oil.

Elevated crude oil prices may weigh on Indian equities as it distorts India’s fiscal math.

Rupee’s health

The rupee appreciated by 18 paise to close at 71.78 against the American currency on Friday, extending gains for a second day.

On a weekly basis, the local unit lost 50 paise.

“Rupee has been retracing its losses for the last two sessions. From the low of 72.25 registered on November 14, the rupee has retraced back to 71.80 levels. However, we believe that the primary trend of the rupee is bearish and it is likely to find resistance around 71.50 odd levels,” PTI reported, quoting V K Sharma, Head – PCG & Capital Market Strategy, HDFC Securities, saying so.

If the currency continues its upward march, riskier equities will remain favourites. In the case of rupee’s weakness, gold is expected to gain.

(Source: Moneycontrol.com)

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

Factors that will keep traders busy this truncated week

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

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The market continued to close higher for yet another week that ended on November 8. However, there were moderate gains due to selling pressure on Friday.

Overall, it was a consolidation week after Sensex hit a record high of 40,749.33 on optimism over signs of progress in the US-China trade deal and reforms for realty sector. But the downgrade of India’s outlook to negative by global rating agency Moody’s made bulls cautious towards the end of the week.

The Nifty50 gained 0.14 percent, but settled way below psychological 12,000 levels. The BSE Sensex was up 0.39 percent. However, the broader markets underperformed frontliners as the Nifty Midcap index fell a percent and Smallcap index shed 0.8 percent.

As most of earnings season, which was slightly better-than-expected, seems already priced in by the market (gained over 4 percent since the beginning of Diwali and nearly 13 percent upside since September 20), the current consolidation and some amount of profit booking was warranted, and that this is expected to continue in coming sessions, experts feel.

“Valuations are back to premium levels specifically for large and blue-chip stocks which could have some impact in the trend of the market in the short term. But outlook for equity market has improved a lot for long term gains,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.

The Q2 results provided hope that earnings growth in the second half of FY20 will expand due to more reforms, government stimulus, improvement in the global economy, post-monsoon season and cut in interest rates, he said.

The market will remain shut on November 12 for Guru Nanak Jayanti.

Here are 10 key factors that will keep traders busy this week:

Earnings

As we are in the last week of the September quarter earnings season. More than 2,700 companies will announce their results in just four days.

It includes larecaps like Coal India, Hindalco, Britannia Industries, Aurobindo Pharma, Bharti Airtel, ONGC, Grasim Industries, Motherson Sumi Systems, Oil India, Cadila Healthcare, ABB India, NALCO, etc.

Among others, Metropolis Healthcare, General Insurance Corporation, Mahanagar Gas, Symphony, IRCTC, Thermax, Blue Star, Coffee Day Enterprises, Bata India, Vodafone Idea, Glenmark Pharma, Dish TV, Page Industries, Dilip Buildcon, etc. will also be closely watched by the Street.

Bharti Airtel

The company had postponed results announcement date by over two weeks to November 14 as it sought more clarity and “support” from the government on Rs 42,000-crore statutory dues it owes to the exchequer following the Supreme Court of India’s judgement on annual adjusted gross revenue.

Hence, Airtel and competitor Vodafone Idea, which will also announce results on same day, will be closely watched.

Bharti Airtel, country’s third largest telecom operator by subscriber base, is expected to report more than Rs 1,300 crore loss in quarter ended September 2019 with sequential decline in India wireless business and 2-3 percent QoQ fall in ARPU but this could be a steady quarter for its Africa segment, brokerages said.

“We expect a 1.5 percent QoQ decline in India wireless revenues partly due to the seasonal weakness. EBITDA for the segment will likely be down 5.5 percent QoQ. We are building a 3.3 percent QoQ decline in average revenue per user (ARPU) to Rs 127 per month,” said Kotak Institutional Equities which expects loss at Rs 1,329.3 crore for the quarter.

The brokerage expects a steady quarter for the Africa business with 2.5 percent QoQ growth in revenues and marginal uptick in EBITDA margin sequentially.

US-China trade deal

An end to the 16-month trade war between the world’s two biggest economies, which has slowed economic growth around the world, seems unlikely to end soon especially after US President Donald Trump’s comments on November 8, and that could impact global markets.

Trump said he has not agreed to rollbacks of tariffs on Chinese goods. “China would like to get somewhat of a rollback, not a complete rollback, ‘cause they know I won’t do it. I haven’t agreed to anything,” he said.

The US president also said that the trade deal with China, if completed, would be signed in the United States.

Officials from both countries on November 7 said China and the United States had agreed to roll back tariffs on each others’ goods in a ‘phase one’ trade deal. But the idea of tariff rollbacks met with stiff opposition within the Trump administration, a Reuters report suggested later that day.

Industrial output for September

Industrial production data for September, which will be released on November 11, is expected to see further contraction despite festive season.

Industrial output in August had contracted by 1.1 percent against 4.8 percent growth in same month last year as manufacturing output, which accounts for more than three-fourths of the entire index, showed a decline of 1.2 percent in August, against a 5.2 percent rise in in the same period a year ago.

According to Geojit, the IIP is expected to decline to 2.3 percent in September despite the festive season, as per estimates.

Experts feel the economy to pick up could take more time, though government announced several measures since August.

CPI inflation for October

CPI inflation to be announced November 12 is also expected to climb above the RBI’s targeted 4 percent levels in October due to rise in vegetable prices.

“India’s CPI inflation is expected to be on the higher side at 4.3 percent due to rise in vegetable prices as per consensus estimates. Both the data (IIP and CPI) released is expected to put pressure on rate sensitive stocks,” said Vinod Nair.

Even a Reuters poll of economists showed that Indian retail inflation probably exceeded the Reserve Bank of India (RBI)’s medium-term target of 4 percent in October for the first time in 15 months, mainly because of rising vegetable prices.

Prices of most vegetables climbed during the month as monsoon downpours delayed harvests and disrupted supplies. That was despite a government ban on onion exports, a key component in the Indian diet. Overall food prices — the biggest chunk of the consumer price basket — also rose in October.

WPI Inflation for October will be released on November 14, which is expected to be flat, the lowest in nearly three and a half years.

The WPI inflation rate dropped to 0.33 percent, the lowest in 39 months, from 1.08 percent in same period last year.

Apart from that, Balance of Trade for October and foreign exchange reserve for week ended November 8 will be announced on November 15.

FII flow

Foreign institutional investors (FIIs) continued to pour in money into India since trade issues between the US and Europe and Brexit has reduced and interest rate stance has upgraded from neutral to dovish.

Additionally, the economies of the US and Europe have stability which may have a positive effect on Asian countries’ economies as well. FIIs are considering shifting from safe-haven assets like gold, US Dollar, US debt and equity assets to riskier emerging markets.

FII equity inflows in India turned positive from October to around Rs 15,000 crore and are likely to be positive further, led by reforms and an upsurge to the economy in the future.

But, they will be watchful due to weak financial position of the government due to cut in corporate tax cut and a slow economy. The government is hoping that divestment, spectrum sales and dividends will be an important source of income for the rest of the year.

Technical view

The Nifty50 finally saw much-awaited correction on November 8, forming bearish candle on daily charts while on the weekly scale, it witnessed Doji kind of pattern formation which suggests indecisiveness among participants.

Hence, experts feel the market could see rangebound trade in coming week before moving towards its earlier record high of 12,103 seen in June.

“The overall structure indicates some rangebound trade from 11,780-12,050 in the coming truncated week. Now, any breakout from this range will provide further direction,” Nilesh Ramesh Jain, Manager – Equity Research at Anand Rathi told Moneycontrol.

“We expect tepid start on Monday with some rangebound trade. The momentum might slow down as RSI which stood at 64 has reversed from overbought territory of 72 and giving a sense of caution to the bulls,” he said.

F&O cues

Maximum Put open interest was seen at 11,600 followed by 11,500 strike while maximum Call open interest was seen at 12,000 followed by 12,300 strike.

Put writing was seen at 11,900 and 11,700 strike while Call writing was seen at 12,300 followed by 12,200 strike. Option data suggests the Nifty could be in a broader trading range of 11,800-12,200 levels in coming days.

Continuous call writing at 12,000 strike in the weekly as well as monthly expiry is hinting that upside is capped, Nilesh Jain said.

Amit Gupta of ICICI Direct said in the Nifty, the highest Put base is placed at 11,600 and a move below last week’s low of 11,850 may elongate the profit booking trend towards this highest Put base, which becomes a positional buy again.

Volatility is still near elevated levels of 16 percent, which means market participants are still feeling left out and are skeptical in the current Nifty upmove; this is the factor that may keep the Nifty uptrend continued, he added.

Corporate action

Here are corporate actions which will take place in coming week:

 Global Cues

Globally, following data points will be closely watched in coming week:

Source: Moneycontrol.com

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

China says have agreed with US to cancel tariffs in different phases

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

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China and the United States have agreed to cancel in phases the tariffs imposed during their months-long trade war, the Chinese commerce ministry said on Thursday, without specifying a timetable. An interim US-China trade deal is widely expected to include a US pledge to scrap tariffs scheduled for December 15 on about $156 billion (£121 billion) worth of Chinese imports, including cell phones, laptop computers and toys.

Tariff cancellation was an important condition for any agreement, ministry spokesman Gao Feng said, adding that both must simultaneously cancel some tariffs on each other’s goods to reach a “phase one” trade deal.”The trade war started with tariffs, and should end with the cancellation of tariffs,” Gao told a regular news briefing.

The proportion of tariffs cancelled for both sides to reach a “phase one” deal must be the same, but the number to be cancelled can be negotiated, he added, without elaborating.”In the past two weeks, the lead negotiators from both sides have had serious and constructive discussions on resolving various core concerns appropriately,” Gao said.”Both sides have agreed to cancel additional tariffs in different phases, as both sides make progress in their negotiations.

“He did not give a timeline. In what could be another gesture to boost optimism, China’s state news agency Xinhua reported late on Thursday that the Chinese customs and the Ministry of Agriculture are considering removing restrictions on US poultry imports. China has banned all US poultry and eggs since January 2015 due to an avian influenza outbreak.

Beijing’s signal that a ‘phase 1’ trade deal with the United States was close to being sealed helped Europe’s share markets hit a more than 4-year peak on Thursday and bond yields shuffled higher.

TRUMP-XI MEETING

A source previously told Reuters that Chinese negotiators wanted the United States to drop 15% tariffs on about $125 billion worth of Chinese goods that took effect on September 1. They also sought relief from earlier 25% tariffs on about $250 billion of imports, ranging from machinery and semiconductors to furniture.

A person familiar with China’s negotiating position said it was pressing Washington to “remove all tariffs as soon as possible”.A deal may be signed this month by U.S. President Donald Trump and Chinese President Xi Jinping at a yet-to-be-determined location. Dozens of venues have been suggested for a meeting, which had originally been set to take place on the sidelines of a now-cancelled mid-November summit of Asia-Pacific leaders in Chile, a senior Trump administration official told Reuters on Wednesday.

One possible location was London, where the leaders could meet after a NATO summit that Trump is due to attend from December 3-4, the official said. Gao declined to say when and where such a meeting could be. Since Trump took office in 2017, his administration has been pressing China to curb massive subsidies to state-owned firms and end the forced transfer of American technology to Chinese firms as a price of doing business in China.

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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

China says it will resolve issues raised by India for not joining RCEP

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

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China said on Tuesday that it will follow the principle of “mutual understanding and accommodation” to resolve the outstanding issues raised by India for not joining the Beijing-backed mega Regional Comprehensive Economic Partnership (RCEP).

China also said it would welcome India joining the deal at an early date.

Prime Minister Narendra Modi on Monday conveyed India’s decision not to join the RCEP deal at a summit meeting of the 16-nation bloc, effectively wrecking its aim to create the world’s largest free trade area having half of the world’s population.

“The present form of the RCEP Agreement does not fully reflect the basic spirt and the agreed guiding principles of the RCEP. It also does not address satisfactorily India’s outstanding issues and concerns. In such a situation, it is not possible for India to join RCEP Agreement,” Modi said.

India has been raising the issue of market access as well as protected lists of goods mainly to shield its domestic market as there have been fears that the country may be flooded with cheap Chinese agricultural and industrial products once it signs the deal.

Asked for China’s comments on India not joining the RCEP deal over concern of cheap Chinese products potentially harming its domestic industry, Chinese Foreign Ministry spokesman Geng Shuang told the media here on Tuesday that China welcomes India joining the deal.

“The RCEP is open. We will follow the principle of mutual understanding and accommodation to negotiate and resolve those outstanding problems raised by India and we welcome an early joining by India,” he said.

He said the RCEP is a regional trade agreement and mutually beneficial in nature.

“If it is signed and put into implementation it is conducive for the Indian goods entry into China and other participating countries. In the same vein, it will also help Chinese goods to enter the markets of India and other participating countries,” he said.

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“This is two-way and complementary (deal) and I should point out that China and India are both emerging major developing countries. We have a huge market of 2.7 billion people and there is a big potential in the market,” he said.

Geng said, “over the past five years’ Chinese imports from India have been increased by 15 percent. We do not deliberately pursue a trade surplus against India. We can expand and increase our cooperation in investment, production capacity and tourism and make a bigger pie out of cooperation for sustainable and balanced development.”

Asked whether India’s decision not to sign the deal would dent the RCEP deal, Geng reiterated that China is willing to work with all parties on the principle of mutual understanding and accommodation and continue to solve the outstanding issues.

“We welcome India joining at an early date,” he said and referred to the joint statement issued after the RCEP summit on Monday which stated “India has significant outstanding issues, which remain unresolved. All RCEP Participating Countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues”.

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Not possible for India to join RCEP agreement, says government

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

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The Regional Comprehensive Economic Partnership (RCEP) does not address satisfactorily India’s outstanding issues and concerns. In such a situation, it is not possible for India to join RCEP agreement, the Ministry of External Affairs said.

“The present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP,” government sources said, adding, “India stands for greater regional integration as well as for freer trade and adherence to a rule-based international order. India has been pro-actively, constructively and meaningfully engaged in the RCEP negotiations since inception. India has worked for the cherished objective of striking balance, in the spirit of give and take.”

RCEP is a proposed free trade agreement between ASEAN —  that has 10 member countries – and a group of six other nations — China, Japan, India, Australia, New Zealand, and South Korea. These 16 countries account for almost half the world’s population and a third of its GDP.

Sources further said, “Our farmers, traders, professionals and industries have stakes in such decisions. Equally important are the workers and consumers, who make India a huge market and the third biggest economy in terms of purchasing power parity.”

According to government sources, Prime Minister Narendra Modi, at the ministerial negotiations held at the 35th ASEAN Summit in Bangkok to iron out the agreement, said, “When I measure the RCEP agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the Talisman of Gandhiji nor my own conscience permit me to join RCEP.”

RCEP, in a joint statement, said, “We noted 15 RCEP participating countries have concluded text-based negotiations for  all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020. India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues.”

Indian government wanted safeguards to be built into a China-led RCEP pact to prevent a sudden surge in imports, trade ministry said in October.

Commerce minister Piyush Goyal has been holding talks to allay fears of a flood of Chinese imports if India joined the agreement, the ministry said earlier.

Sources further said, “India will avoid joining Free Trade Agreements (FTAs) with countries with whom there is a huge trade imbalance.”

Indian farmers, MSMEs as well as the trading community that is aligned to the ruling BJP party, had raised red flags on the mega duty-free deal due to the presence of China.

According to Reuters, at least 6 of the pending issues relate specifically to India, where the domestic industry is concerned about spike in imports from China due to the free trade pact. 

To protect interest of the domestic industry, India has demanded that the base year for tariff cuts under RCEP FTA should be advanced from 2014 to 2019.

India maintains that in the 5 year period, tariffs were increased on several thousand products and hence 2019 should be the year based on which tariff cuts should be carried out under the RCEP FTA.

Another contentious issue raised by India is regarding an automatic trigger mechanism of import duties in case of spike in foreign shipments from RCEP nations. In the RCEP FTA work programme, India, China, Australia and New Zealand have been asked to resolve the issue.

India has also sought a carve out from a provision that syncs its preferential duty rates to the RCEP group. The intention of this provision is that in the future if any RCEP member lowers duties for a non RCEP nation under a trade pact, similar benefits will also have to be automatically offered to the RCEP FTA countries. 

In addition, India has sought stringent rules of origin rules — which mandates minimum value addition that needs to be undertaken in a supply chain, before that product is exported from an RCEP country to India. 

Last but not least, the work programme also seeks India to make commitments to the best of its ability on e-commerce — a sector where data localisation norms have become an issue for foreign companies.

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Gold likely to surge up to Rs 42,000 by December-end, analysts predict

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

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Geo-political uncertainties, sustained Central bank buying and weak rupee against US dollar will keep gold under pressure and are likely to push the prices up to Rs 42,000 per 10 grams level by the end this year, according to analysts.

“Geo-political uncertainties emerging from the Middle East may continue to underpin gold prices going ahead to USD 1,650 an ounce in Comex markets and Rs 42,000 in MCX,” Commtrendz Research co-founder and CEO Gnansekar Thiagarajan told PTI here.

The yellow metal is likely to continue to remain bullish till the end of the year mostly due to sustained Central bank buying, geo-political uncertainties and possible year-end squaring of positions in equities boosting appeal for safe-haven gold, he added.

Gold prices were at Rs 38,302 per 10 grams in MCX, while it was at USD 1,506 in Comex.

Motilal Oswal Financial Services (MOFSL) VP-commodity Research, Navneet Damani said, this year has proved to be one of the best years for gold returns as prices have risen by 15 per cent on the domestic front, getting some support from weakness in the rupee that has fallen by 1.4 per cent against the USD.

“We expect that positive momentum for gold could continue further, but the pace of rally could get measured as uncertainties related to trade war is taking back seat. This slowdown in major economies could push central banks to remain dovish for an extended period and that will support gold prices,” he added.

The ease off in trade war could lead to some correction in prices, however, the prices remain bullish and expect to move higher to test previous highs of Rs 39,500 by the end of the year, he pointed out.

Kotak Securities, head of commodities, Ravindra Rao said going forward gold is expected to average in a broad range of $1,460-1,530 in USD and rupee terms average between Rs 36,800-39,400 on MCX.

Investment demand which is the indicator of the safe haven buying in the yellow metal has surged in the third quarter, he said.

Although, the optimism about US-China trade talks and a Brexit deal has prompted traders to book some profits the gold remained bullish as the ongoing trade concerns have already impacted the global economy as seen from the International Monetary Fund projections, he opined.

As per the IMF the global economy is projected to grow at 3.5 per cent in 2019 and 3.6 per cent in 2020, 0.2 and 0.1 percentage point below last October’s projections, he added.

Abans Group chairman Abhishek Bansal said geopolitical tensions flared in the Middle East after an attack on the Saudi Aramco oil facility on September 14.

“Gold also found support after US lawmakers launched a formal impeachment inquiry on President Donald Trump on September 24. All these developments created fresh uncertainty in the financial markets, which raised gold prices during the second and third week of September,” he added.

The spot gold prices are likely to bounce back while remaining above the critical support level of USD 1,458, he said.

“Gold prices in India would remain firm as we expect the rupee to weaken further from current levels. The government’s plan to boost economic activity through various tax sops could end up in higher fiscal deficit, thereby causing depreciation of the rupee,” he added. PTI SM AP
.

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