Midnight News – May 08th 2020

unnamed Midnight News  – May 08th 2020


SEBI has now asked Franklin Templeton to focus on returning the money of unit holders in the six schemes at the earliest. On 24 February, Franklin Templeton had wound up six of its debt schemes due to weak asset quality and high redemption pressures. These six funds had a combined AUM of over Rs.30,000 crore. While announcing a freeze on the four schemes, Templeton promised to return unit holder money at the earliest although it did not specify a time frame Now SEBI has asked FT to purely focus on a workable plan to return the money to investors with a clear cut time table.

US jobless rates have been on an uptrend over the last four weeks but in the latest week, the jobless claims have touched a record 33.5 million. The US has seen a spate of layoffs across consumer facing industries as the lockdown has extended much longer than originally anticipated. The pace of new claims may be slowing but the jobless claims overall still remains at a level unimaginable even in early March. Nearly 21% of the working population in the US are currently claiming jobless claims. Just a year back, joblessness had touched a record low of just 4%; almost defined as equal to full employment.

According to a report prepared by the IEEFA, Power Finance Corporation (PFC) maybe sitting on potential NPAs of nearly $6.8 billion. As per the latest loan book of PFC, it has disbursed loans to the tune of Rs.344,000 crore to the thermal power sector. Of these loans, nearly 15% are NPAs representing a quantum of over Rs.47,000 crore. The report has pointed out that both PFC and REC may have been funding unviable thermal power plants resulting in a ticking time bomb of NPAs. Most of these NPAs are yet to be recognized. Most off the thermal power loans have virtually become stranded loans.

RBL Bank reported 54% fall in net profits to Rs.114 crore on the back of sharply higher provisioning. On the positive side, the net interest income was up by 38% at Rs.1021 in the March quarter. Even the net interest margins (NIMs) had expanded sharply to 4.93% from 4.2% in the previous year. For the quarter, the bank has made provisions of Rs.614 crore on account of bad loans and another Rs.115 crore has been provided by the bank for COVID-19 related losses. The bank also admitted that nearly a third of its loan book was under moratorium, which means cash flows will continue to be tight for now.

Inflows into equity funds dropped almost 25% to Rs.83,781 crore for the fiscal year 2019-20. This marks the sixth consecutive year when inflows into equity funds have been positive, although the momentum has been sharply lower in FY20. The 25% fall in inflows on a YOY basis was largely on the back of volatile equity markets and a sharp selloff in the markets post January 2020. The last time equity funds had seen outflows was in FY2014 when it had seen outflows to the tune of Rs.9269 crore. Equity fund inflows had peaked at Rs.171,000 crore in FY18 and had been trending lower since then. In the last one year, equity fund SIPs have continued to see strong inflows, which means the bulk buying into equity funds is actually negative. That is still good news as it shows long term retail money in equity funds.

Reliance Industries may look to sell its 4.9% stake in Asian Paints worth $989 million in the open market. Currently, RIL holds this stake via Teesta Retail, a group company of RIL. While the official spokespersons of RIL have denied any such plans, the markets are expecting that RIL may look to monetize this stake at the current valuations to give a boost to its war chest. At a broader level, RIL may look to hive many of its non-core investments to raise cash to reduce its net debt to zero levels. RIL currently has net debt of Rs.160,000 crore and it plans to become zero debt by March 2021.

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