Midnight News – Jun 10th 2020

unnamed Midnight News – Jun 10th 2020

 

The Dow Jones Index opened weak on Tuesday ahead of the all important Fed meet that is expected to offer views on the economic recovery. The US economy is grappling with one of the worst economic slowdowns in the current calendar year. World Bank has estimated the world economy to contract by 5.2% with most of the developed economies, including the US and large swathes of Europe contracting by over 7%. The markets are expecting another warning from the Fed. The World Bank has already warned that the economic slowdown this year could be the worst since World War II.

Bharti Airtel will pick up an additional 6.3% stake in Dhaka based Robi Axiata Ltd. Robi is the second largest telecom company and Bharti already holds a 25% stake in the company. This stake acquisition will take the stake of Bharti Airtel to 31.3% in Robi Axiata. Bharti already holds a 100% stake in Warid Telecom of Bangladesh, which it acquired in two tranches in 2010 and 2013. This Bangladesh based company is a subsidiary of Axiata Telecom of Malaysia. Bangladesh has been one of the fastest growing telecom and digital market in the world and has seen a high level of technology acceptance in the nation.

Foreign Direct Investment (FDI) flows from Cayman Islands have jumped 3-folds to $3.7 billion in the fiscal year 2019-20. It has ranged between $1 billion and $1.25 billion in the last couple of years. With this sharp spurt, Cayman Islands has emerged as the fifth largest FDI investor into India. Similarly, FDI flows from Cyprushas also doubled although it is still under $1 billion. Cayman Islands has become a preferred jurisdiction for routing investments considering the absence of direct tax costs at Cayman Islands. This could raise some questions as India is wary of indirect routing of Chinese FDI.

Power Finance Corporation (PFC) is in talks with bankers to launch $750 million overseas bond issue to shore up its balance sheet. PFC is India’s largest lender to the power sector and this will mark PFC’s first overseas bond issue in the current fiscal year. In the previous fiscal year, PFC had raised close to $2 billion via this route. Its last offering in January was oversubscribed by 4 times. For the fiscal 2018-19, PFC had reported total revenues of Rs.54,156 crore and net profits of Rs.12,640 crore. It may be recollected that PFC had acquired REC in March 2019 for a consideration of Rs.14,500 crore.

Hero Moto reported 26% fall in net profits at Rs.614 crore for the Mar-20 quarter. Total revenues for the quarter was 20% lower at Rs.6334 crore on the back of weak sales off take and a lockdown through most of March. Hero Moto sold 1.32 million two-wheeler units during the March quarter and 6.39 million units for the full year. Total revenues for the full year were lower by 15% at Rs.29,255 crore even as full year profits were marginally higher at Rs.3641 crore on the back of better cost management. For the year ahead, Hero Moto top management is predominantly betting on a return to production normalcy as well as a sharp pick up in rural demand due to a good Kharif crop in this year. Hero Moto continues to remain the largest two wheeler player in the Indian market by a margin.

Under pressure from the unit holders and the judgement of the Gujarat High Court, Franklin has opted to put its e-voting for the six liquidated funds on hold. The e-voting was supposed to happen between 09 Jun and 11 Jun. Gujarat High Court had refused to vacate the stay, leaving Franklin Templeton with no choice. In the last week of April 2020, Franklin Templeton had suddenly announced the winding up of six of its debt schemes due to some bad credit fund decisions. FT wanted to push through the e-vote leaving the unit holders with no choice but to accept the truncated value of the portfolio.

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